I pushed the wiring instructions over to him.
A few minutes later, I confirmed that close to $10 million was in the account of my client, the sole shareholder.
Then we all went to lunch.
Ah, the shiny object, the more or less instant gratification. The $10 million in your pocket. Or the won RFP and the new contract with St. Mark’s Community Memorial Health Center.
But what comes next? And, has your undivided attention on the shiny object created a gap in, or, perhaps worse, a blockade against, your future?
For example, consider the sale of a medical group that comes with an enforceable five year post-employment covenant not to compete. If you’re selling shareholder Dr. Smith, age 63, who’s retiring or moving from Bakersfield, California to Bangor, Maine, the covenant is a nonissue.
On the other hand, Smith’s partner, Dr. Jones, age 43, with a spouse whose job isn’t portable and with two kids in junior high school, has to stay local. As a result, the practical result of the covenant will likely be that Jones has no choice but to be forced into continued employment at reduced compensation with the group’s new owner for many years to come. What if Jones had focused so intently on the shiny object, the coming sales proceeds that were burning a million holes through her mind’s eye, and not given much, if any, thought as to what situation it would create five and more years out?
This situation is by no means limited to the medical group M&A market. It’s there in connection with “won” RFPs (the situation of the “winner’s curse”). It’s there in connection with employment agreements. It’s there in many, many instances.
Every deal, every arrangement, every contract has to be thought of both in the context of your tactical goals (maximizing the desired specific outcome) and in the context of your strategic goals (maximizing the desired long-term outcome.)
Most of us do well in terms of identifying tactical goals. It’s the two or three or more moves down the line into the future, the strategic goals, that generally get short shrift.
Then they come back and bite you in the ass.
