His two brokerages required a lot of work because, having never documented the processes involved in running them, he ended up just doing most of the work himself. Then, in 2005, he had a catastrophic snowboarding accident that left him unable to work for several months. He used his convalescence as an opportunity to sell both brokerages, but since neither of the new owners knew what was involved in running them (and Brianâs lack of documentation certainly didnât help), they both went under soon after.
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I was also told that a brand-new CEO shouldnât be trying to make huge acquisitions. I was âcrazy,â as one of our investment bankers put it, because the numbers would never work out and this was an impossible âsaleâ to the street.
The banker had a point. Itâs true that on paper the deal didnât make obvious sense. But I felt certain that this level of ingenuity was worth more than any of us understood or could calculate at the time. Itâs perhaps not the most responsible advice in a book like this to say that leaders should just go out there and trust their gut, because it might be interpreted as endorsing impulsivity over thoughtfulness, gambling rather than careful study. As with everything, the key is awareness, taking it all in and weighing every factorâyour own motivations, what the people you trust are saying, what careful study and analysis tell you, and then what analysis canât tell you. You carefully consider all of these factors, understanding that no two circumstances are alike, and then, if youâre in charge, it still ultimately comes down to instinct. Is this right or isnât it? Nothing is a sure thing, but you need at the very least to be willing to take big risks. You canât have big wins without them.
What happened, however, is that we did neither. We saw two forces emerging in the industry that allowed us to chart a very different course. At the time, it was fraught with risk. But perhaps because the other alternatives were so unpalatable, we decided to stake the companyâs future on a totally different view of the industry.
A frenetic approach just makes the company even more unstable. One, youâre not likely to be right. Two, even if you are right, nobody knows what the heck youâre doing. Three, you havenât bothered to listen to anybody, so you have strained relationships you want to cement. Now, if youâre going to run out of money in five or six days, youâve got a bit of a different story than if youâre going to run out of money in ninety days. Thatâs what I call the âburning platformâ problem. If youâve got a burning platform problem, you donât have a lot of time, so you have to take things in two steps. You have to gather your team together and say, âGuys, before we do anything else, we had better put this fire out. Then weâll take a deep breath.ââ - Henry Schacht.
It is one of the big benefits of being a private company. When I first bought these lands from major oil companies, they were looking ahead one quarter or one year. They wanted to get the assets âoff their booksâ to make their financial ratios look better. We can do more with these businesses because we donât suffer the crazy pressures that are put on a public company.
That was the result of Coteâs marathoner âgo slow to go fastâ moves coming to fruition. Rather than flashy, highly risky, and dramatic moves, heâd made rigorously calibrated incremental improvements in business operations. These were combined with a steady stream of divestments and moderate acquisitions. Indeed, he is a standout example of someone who has mastered programmatic M&A, the systematic, highly strategic, and well-paced acquisition of relatively small companies compared the the size of the acquiring firm.