Meanwhile…
I’m a total layman with regards to mergers and acquisitions, so can someone please teach me:
Can Don sell his 1/3 ownership against Dave’s will, or does the sale have to be all-or-nothing (3 out of 3) and Dave, Don, and Heather must *all *agree to sell out?
Most promises are like that. And no, don’t bring up marriage, because marriage is a contract. Promises and contracts are not the same.
As mentioned upthread, the only reasons for Don not to sell are honor and friendship. Assuming that he goes to Dave and asks to be released (which he may not; the OP only says that he’s tempted), I would, in Dave’s ace, release him from the promise for the sake of the friendship. It is probably the last act OF their friendship, as Don will have just announced what his price is. But it’s a very high price; I might understand. For a twenty-year friendship, I might forgive.
If not – well. Two decades ago I had a couple of close male friends who dumped e for entirely justified reasons; there is no sense in which I was not in the wrong. But one of them, before calling it quits but after deciding to do so, did me a major favor for the sake of only a four-year friendship.
So yeah, I can see Dave, for the sake of 20 years of friendship, letting his friend become filthy rich. Don just shouldn’t expct to keep the relationship.
There is no legal prohibition on Don & Heather selling their sharees to RI or anybody else, and no ethical reason keeping Heather from doing so. But since a large part of RI’s interest is Dave’s talents, RI won’t pony up as much unless they know Dave will be staying with the company. They can’t force him to work for him. The most they can do is keep him from working for someone else (or himself) for a while, and even that can only happen if Dave has a contract with DCD and that contract has a non-compete clause. That clause won’t be for forever. Maybe a year, maybe five.
If Dave doesn’t tell RI he’s agreed to the buyout, RI will surely reduce the offer (or else they’re idiots who will sooon run the company into the ground). What Don and Heather can do is screw Dave out of a lot of money, because RI can buy DCD at teh reduced price and still own the intellectual property, name, and goodwill. But once they do that, Dave will be able to sell his sharesto somebody else. He may not make as much money as the other two, but he’ll still do well.
And of course, Dave doesn’t much care about money anyway. He’s living on a fifth of Don’s salary of his own free will.
Don and Chris may or may not have been able to make the same money working somewhere else, but then they would be employees and not owners. Big difference.
The big evil firm isn’t much interested in DCD’s marketing or operations. They have successful marketing and operations of their own. It is interested in DCD’s technology and innovation. They are interested in what Dave has produced. It was Dave that produced the company’s value.
So, Don can legally sell out, but he will then be a douchebag forever.
If you will disregard your principles for a dollar amount, did you* really* have those principles?
I am reminded of the joke where the punchline is “We have already determined what you are, now we are just talking about a* price*”.
So anyone who has ever gotten divorced is a douchebag forever?
What if he did a lot of good deeds with the money?
“Yes, he built that homeless shelter, and fed all those starving children, and donated enough to cancer research to find a cure for some types of cancer, and discovered a great way to get water into a desert, but he broke his promise to a guy that one time, so he’s now, then, and forever a douchebag!” :dubious:
For purposes of corporate decision-making, and to the extent the promise addressed those issues, yes. The promise was an integral part of how the three friends agreed to set up the company. The company still exists and two of them still work there; the promise still holds. I don’t see it as a legal contract, but a moral obligation.
I suspect Dave would release him from his promise under those circumstances. Don isn’t being held in involuntary servitude - he could always quit and work somewhere else, and quite possibly earn more. He just can’t do anything with the company contrary to the promise he made to Dave.
if Don was struggling to feed his family, it would surely mea that the company was a failure that nobody would pay billions of dollars for, or perhaps that he had sold his shares to his buddies years back and then gone bust personally, in which case the promise, again, would not apply…Though hopefully, in the latter case, Dave would have given him money out of friendship.
[evil!skald]
When I murder Peter Jackson, EVERYONE WILL KNOW.
[/evil!skald]
That’s a totally different situation though; you’d think they’d have already voted themselves as high of salaries as they could manage without seriously impacting the research, which I’m suspecting in an operation of that size, could easily be much higher than 250k.
Regardless, since Chris is now dead, Heather has an ownership stake, which means that she has a claim to 1/3 of the profits, and a 1/3 voting interest. Presumably the profit is higher than 250k a year- maybe Dave and Don can work a deal to not plow quite so much money back into R&D and raise the dollar amount of the profits, without having to sell out to RI.
If Don really wants the money but thinks he will face difficult conversations after betraying Dave he should just have him whacked.
Honestly, the promise made sound sa little immature. Kind of like the promise kids make to each other:
“Let’s promise to always be besties no matter how old we get, okay?”
“Okay!”
I think Dave needs to grow up and realize life is complex and always changing. Additionally, the other two dolts could have maybe realized it was a childish agreement in the first place and acted accordingly. But I’m willing to give those two guys a break because perhaps they were young 20-somethings when they made the promise and didn’t know better.
I think Dave is being urerasonable expecting Don to with hold his own aspirations (that directly impact his own children) just to satisfy Dave’s idealism.
How many people in the world would consider a friendship to be worth sacrificing $800 million? I think very few.
Also, from Don’s perspective, what does he get out of sacrificing a billion dollars? Nothing. He gets to make *Dave *feel good about not selling out to war contractors.
The ones that got divorced because the betrayed their partners? Pretty much.
If he wants to do good deeds, he can start by honoring his word.
Sorry, I didn’t quite convey that right - I’m not saying heirs don’t get paid out for the value of the shares on death, but the actual shares (i.e. ownership interest) isn’t transferable. This was the setup at my wife’s last commercial job - there was a pool of shares, you got paid dividends, but if you left the company (for whatever reason), you (or your estate) had to sell those shares back to the company. Only actual employees could own shares (and vote on company decisions).
See my answer above.
My friendship with the guy next door? Not worth it.
My friendship with my best (and only remaining) friend from college? Wroth over a hundred thousand, maybe a million.
My friendship with my work wife, mother to my godkids, designated mrdian to my kids, closest ally at work, one of my wife’s best friends, closest confidante, bitch-slapper when I’m being an idiot? Yeah, that’s worth $800 million.
But if Don refuses to do sell out, maybe what he’s protecting is his own honor. The OP doesn’t say he’s decided to do it, only that he’s tempted. I’m tempted by the hot barista at Starbucks who spontaneously decided to call me Doctor Evil and long gave me free everything, but I wouldn’t sleep with her even if my wife would never find out, because my fidelity to my wife is worth everything.
What do I get out of not fucking the barista when my wife won’t find out?
Don’s interest, if he foregoes the payday, is honor. That is not valuelesss to some.
Can you explain why you think the promise immature?
Let’s say the ownership setup was a little different. Over the years, before DCD became really attractive to outside investors, Chris ended up buying back his friend’s stakes, so he is now the sole shareholder and RI has to persuade him to sell out or just take their ball and go home. Is he immature to refuse to sell?
For me, I think any FOREVER AND EVER promise is inherently immature, as is any promise about a significant amount of money that’s not in writing. If you’re an adult making a serious financial commitment, then you make the promise formal and well thought out, not just say something vague over drinks sometime. If they were serious about this promise and not just saying feel good stuff to each other over drinks, it would be trivial to set up the company so that the promise was an integral part of the corporate structure. Things like giving a partner (or just Dave) a veto over a sale, or bylaws that make sale to Big Unethical Company impossible, or many other things can move this from a ‘pinky swear’ to a serious adult promise. The fact that they didn’t bother is pretty telling.
That’s why real people treat promises as limited in scope, duration, and circumstances and not as eternal, unmitigated suicide pacts. If I promise to go to your wedding when we’re in college, I’m not going to bankrupt myself 20 years later if you do a destination wedding while I’m unemployed. If I promise not to sell the console you gave me, I’m not going to apply it a decade down the road when the cool thing is no longer of interest to either one of us and I’m selling off clutter from my house.
This also means you can make a reasonable promise without spending an hour on disclaimers and exceptions. If I promise to help you move, there’s obviously limits on that - if I have a back injury and can’t lift, if my job requires me to work that weekend, if my mom’s in the hospital, or anything similar, I’m obviously not going to be there, and it’s not unethical for me to put ‘keeping my job/health/family’ over a casual promise to help you move.
This. Plus, the whole thing about not selling out to big corp just wreaks of adolescent angst.
I remember when I was a teen, my friends and I would snub our nose at any band that dared allow themselves to be sponsored by major brands. We called them “sell outs”, and in our mind, a proper rock’n roller didn’t sell their brand to the likes of Pepsi or whatever.
In such a situation, the ethical response is to sit down with the person you made the promise to, lay out your reasons for being interested in the course of action and why they should also be interested, and hope to change their mind.
If you can do that, you’re off the hook for the promise. If you can’t, then you’re still on the hook.