Times of crisis bring out either the good in people or the bad in people.

Multiple times during the Panic of 1907, J.P. Morgan was called upon to help avert disaster. In one particularly noteworthy episode, Morgan summoned the presidents of the largest New York City banks to raise $25 million in 10 minutes to save the New York Stock Exchange. Other than pledging what they could afford on a ledger with their bank’s name, none of this was documented.

Roll forward to the COVID-19 pandemic, and it seems very unlikely that this would happen today. Rather — whether it involves governance, commercial contracts or M&A transactions — a common theme we have seen emerge is parties trying to sidestep their fiduciary duties or contractual commitments. Perhaps the poster child for this mentality was Elon Musk’s attempt to submarine his Twitter acquisition. While ultimately unsuccessful, others have had better luck — one dated example is the way Ray Kroc pushed the McDonald brothers out of their eponymous business during his own time of personal crisis. (If you’re not aware of Kroc’s tactics, see The Founder {2016}).

Whatever the motivating factor — doing a bad deal, an uncontrolled change in circumstances, using perceived leverage or general civil unrest that seems to absolve a lack of integrity — we have noticed an unfortunate rise in gamesmanship in business transactions of all types. Even more unfortunate has been the lack of supervision, or outright complacency or participation, by boards of directors in allowing this to happen.

See Crain’s Association for Corporate Growth 2023  here.  Read the article by Jayne Juvan and Chris Hewitt below.