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Hairy Turtles

John Kielich, CPA - Managing Director of Kolb+Co. M&A Advisers   email | bio 
LeAnne Foster, CPA - Senior Associate for Kolb+Co. M&A Advisers   email
December 2010

How easily we misunderstand things. Recently my colleague and I were talking, and I thought he was talking about hairy turtles. Actually, my mind was racing trying to figure out exactly what he was talking about. I personally had never seen a turtle with hair! Of course, it turns out that I did not correctly hear what he was saying.

It happens to all of us. We overhear a few words out of context, or don't hear words clearly, and our brains frantically try to make sense of what our ears heard. Misunderstandings can usually be cleared up by a prompt face-to-face conversation. As time passes, however, some of the details of these face to face conversations begin to fade.

How do you communicate clearly and remember things "correctly?" What do you do if two people remember things differently? Avoid these problems by putting things in writing. State facts as clearly as possible, put them in a document and have the parties involved sign them. Documenting a conversation and/or an agreement preserves the details and mitigates misunderstandings. While not entirely foolproof, a written document can be very important when questions arise.

There is a lot of excitement and enthusiasm in starting something new, such as a business. The conversations are full of ideas and ambition. However, excitement eventually fades, personalities can clash and questions often arise. These are the times when you'll need to go back to those signed agreements.

Seasoned advisers are extremely valuable when drafting these documents. They have seen what has succeeded and what has failed, both from a business standpoint and a document standpoint. First and foremost, they can view the situation without emotion. Attorneys can figure out the precise wording needed to define the details and uphold the contents of your agreement once they have been decided. Merger and acquisition advisers understand businesses of all maturities and sizes because of their daily work. This makes them extremely aware of what works, and what doesn't work, within a business plan. These and other advisers, such as human resource specialists and bankers, can also assist with important documents needed throughout the life of a business.

Too often, especially in a start up stage, money is very tight and anything that can be put off or is deemed unnecessary is not done. A key advantage to using advisers and leveraging well-prepared documents is that when you are looking for financing, banks appreciate the fact you are associated with reputable advisers and have more confidence in lending funds to you. Unfortunately, advisers do require payment, but not usually for the first meeting. Interview them to determine if they will be efficient and if you are comfortable working with them. Then invest a bit of money to ensure starting off on the right foot. It will likely save you time and money in the long run.

And don't forget to watch out for hairy turtles.