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The Case: The Billionaire Backer |
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Frank asked us
for a “quick read” of his situation. He wanted
to evaluate the behavior of his patron, a
reclusive foreign multi-billionaire who had
arranged funding for the company through a third
party corporation. “It's probably fine,” he
said. He could not have been more wrong! |
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The Players
Frank, 34, recently named CEO of a small,
highly entrepreneurial health care company. A
direct, decent man, his creed was “people
respond to your respect for them.”
His backer, 66, a European billionaire
entrepreneur now engaged in funding small
companies, after cashing in during the ‘90’s
spike in technology.
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The Problem
The billionaire promised expansion and a public
offering, but nearly two years went by and the
talk was not matched by action. The man's name
was legendary, but not much could be learned
about his dealings since becoming super-rich. He
was extremely secretive and could not be spoken
to directly, communicating only through a
"number two, just like The Millionaire in the
old television show of the same name. “Number
Two” gave good will, hope, and promises, but no
firm time commitment. |
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The Smart Relationship Insight
We smelled a rat, and became extremely concerned.
The billionaire had an option on the company’s real estate,
which was steadily increasing in value. We
looked at the billionaire’s
behavior as head of his previous public
corporation a decade back. There was nothing
illegal, but many instances of manipulation of
subordinates and business partners. We urged
Frank to bail out immediately. |
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Outcome
Sadly, Frank’s response to our alarm was to dig in
even more, especially after a timely, and
obviously manipulative visit from the Man
Himself. We moved heaven and earth, but Frank
was frozen in place. He waited for rescue, but
his frantic requests for funding were ignored,
and the company declined. Soon he was forced
out, and the company was liquidated. Frank was
forced to take the blame, an embarrassing and
career destructive experience. The valuable real
estate was sold, to the billionaire, yielding
a huge profit.
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