It doesn't much matter what side of a trade you're on - or if you're in the middle. When it comes to getting to the closing table, being honorable in the process is key. You lie and you die... figuratively, of course. The same goes for missing agreed upon deadlines, failure to honor commitments, being careless, or missing a mark and not keeping all parties informed.
Business sales are delicate and complex transactions. A disappointing number of them survive through completion. There are thousands of tiny moving parts and dependencies in these transactions. It takes a team effort to get a deal done. If someone fails to mention or notice that there is a franchise fee to pay with a sale or transfer of ownership, that could break the deal. If parties negotiate something verbally, then fail to follow it up with the paperwork, gains could be lost. If someone fails to report a legal or credit matter, it will be discovered anyway during due diligence, but instead of agreeing to deal with it, other parties in the deal might be aggravated. They may lose money they didn't need to lose, and/or prefer to walk away.
Ask anyone who's been in business for a while how important it is to have honor in business and you'll get the same response - it's critical. Deals break every day because someone missed a milestone, tried to misdirect attention from a flaw or mistake, or didn't show up in good faith.
Acting in Good Faith: the concept of being sincere in one’s business dealings and without a desire to defraud, deceive, take undo advantage, or in any way act maliciously towards others.
Honor in Business
Honor in business is a deliberately broad term in this article. We do this because to be collectively exhaustive about all the ways to be honorable or not honorable would require a book our dear readers don't have time to read. We will, however, bullet a few points to illustrate why keeping the concept of honor in business at a high level is necessary.
Saying one thing and doing it. If you say you're going to do something by a date and time, others on the team are marking the calendar and building other components of the project around that. An offer review meeting may be penciled in on Friday for an offer that's expected by close of business Thursday, for example. When the offer doesn't show, the effect can be like a hand grenade in the Friday morning schedule for people the offerer is hoping to impress.
Being on time. Everyone in a business sales transaction is going above and beyond for the hope that the closing table is within reach. Most of the time, parties to the transaction are not getting paid for the effort they're putting into realizing that hope. Sellers can be coming off a busy operations time table and squeezing these meetings into private time to maintain the confidentiality of the effort. Intermediaries and support professionals may be trading off one effort for another in a never ending competition for their time. Buyers may be looking at several options. Being late raises blood pressure. It interrupts flow. It's unavoidable at times, but done often enough and it sets up a bad emotional experience for the people involved.
Not hiding the truth. Some people like to point out that there is a difference between outright lying and hiding the truth. In the first case, some say, someone is trying to deliberately obscure. In the second case, someone is simply not mentioning something they know to be true and potentially material to the project. When we talk about hiding the truth, we're not naïve to the normal process of selling, where there is a time and a place for revealing certain things (in due diligence, for example) and a time and a place to NOT reveal things (before an NDA is signed, for example). We're referring to the Keyman who lies about a credit score, the seller who lies about pending litigation, or the buyer who lies about proof of funds. There is a team of people in every business transaction who's job it is to uncover facts material to the sale on both sides. In many cases, these people have experience and skill in this process. While we can't say that things don't get missed in specific deals and people don't get away with stuff from time to time, the risk is significant. Not acting in good faith sours everything.
Being responsive. We throw this one into the mix to illustrate that intent and will play a big role in honor in business. We have choices when we see that email, text message, or caller ID pop up. We have choices how and when we even check messages or answer the phone at all. There are really good reasons to check or not to check - all of them are individual and situationally specific. Our point is less about being reactionary to every tickle and ding on your mobile device, and more about setting the expectation and honoring whatever system you use. If, for example, you answer and respond to email at 9am every morning, let people on your team know then be sure to do that. If you respond to everything within minutes, then make sure when you can't that you have some way to communicate that you can't. Don't leave people wondering if/when you will be responding to issues. That's like trying to play soccer without knowing if/when your team mates are going to be in position to send or receive a pass. Everything slows down and can become messy. When your goal is to get to the closing table, all parties must make an effort to be responsive.
It bears mentioning that honor in business builds trust. Trust is the glue that holds teams together in times of trouble and stress. Teams can weather proverbial (and even literal) storms when there is a high degree of trust. Maintaining honor in business is one of the best ways to build trust and build our reputations as people who are trust-worthy. The opposite is also true.
Our list above is by no means exhaustive, but we think it is good enough to highlight our point that honor in business has as much to do with intent, committment, and internal motivation as it does with sticking to the letter of the law around engagements. Honor in business requires a promise to bring the best version of ourselves to the effort. It requires commitment to the project, to other parties to the transaction, and to ourselves.
None of us are perfect enough to always be on time, always hit the mark, or always respond the way we'd like to. Fortunately, the human being is well adapted to recognizing when others in a group are making a sincere effort with good intent. We're good at forgiving infractions, mistakes, and even lapses. But the person in a deal who works without honor in business will make already challenging projects more challenging, less enjoyable than they should be, and a lot more likely to not get across the finish line.