Opinion
Messy Sony-Zee breakup shows in business as in love partings are never easy
Summary
- Business relationships end badly on termination because just like in a marriage, no one wants to visualize parting at the inception
Sweet partings are a thing of the movies. Rick’s passionate goodbye to the love of his life, Ilsa, in Casablanca accompanied by those immortal words “Here's looking at you, kid", is the kind that gives separations a good name but it’s also the stuff of celluloid fantasies. In real life, breakups aren't just painful, they are also messy and acrimonious.
So too in business.
Whether it is the accusations and counter accusations that are now being traded by partners-not-to-be Sony Pictures and Zee Entertainment or the lawsuits Wipro filed against two former executives including its former CFO Jatin Dalal, there's no such thing as an amicable parting. At startup Bharat Pe, Ashneer Grover was controversially ousted from the firm he helped found, after it accused his family of misappropriating the company’s funds. Elon Musk fired Twitter’s top executives including CEO Parag Agrawal immediately after he took over the company and minutes before they could put in their papers. It saved him a small fortune in severance pay but left them with the ignominy of being sacked.
Whatever happened to graceful exits?
Commenting on the lawsuits against the company’s former leaders, Wipro’s executive chairman Rishad Premji said it wasn't personal. But after the episode would Dalal ever come back to the company he served with distinction for close to 21 years before he moved to rival firm Cognizant?
The world of business is fluid and asymmetric which is why it’s a good idea to allow for reverse flows. In 1999, Ratan Tata, struggling to sell his struggling car business to Ford was rebuffed by the company’s executive chairman Bill Ford with the words "You do not know anything, why did you start the passenger car division at all. We are doing you a big favor by buying your car division". Tata decided to walk away from the deal and just nine years later his company Tata Motors bought Ford’s struggling luxury car brands, Jaguar and Land Rover, for an all-cash deal worth $2.3 billion. This time the boot was on the other foot and Ford reportedly told Tata " You are doing us a big favour by buying JLR, thank you."
It is a useful example to keep in mind when recrimination and revenge threaten to take over reason following a deal gone sour or a corporate marriage that’s come apart. Companies now have stringent legal provisions as part of pre-nuptial agreements to take care of all eventualities including break ups. But none of these account for ego. While tweeting that the termination notice from Sony was a sign from the gods, the Goenka family is also threatening to pursue legal options to enforce the JV. That's because Sony's rejection is a bitter pill for a founder who wants to control his company with a bare 3.9% stake. Sony, in turn, probably made a bad call when it agreed, two years ago, to allow Goenka to continue as CEO of the merged entity. The $90 million termination fees it is asking for now seems gratuitous particularly since Zee is probably going to remain on the table for a while. Driven by a different entity (or entities) it could still be a possible acquisition target for Sony.
Around 2007, a bitter dispute broke out between partners Wahaha, China’s largest beverage company, and Danone over ownership issues leading to Danone’s exit from the joint venture and from China. In a research paper on the subject, titled Bitter-Sweet Joint Venture Relationships, Stewart Hamilton and Jinxuan (Ann) Zhang outlined key lessons from the dispute some of which seem most relevant when juxtaposed on the Sony-Zee divorce. Think long-term from the beginning, advise the authors and, vitally, think about the consequences before taking legal action. Sony, probably, didn’t do enough of the former and may now also be guilty of not doing the latter. In its legal battle with Wahaha, Danone ended up losing the case. What’s more, it ended up antagonizing the firm’s distributors who called for a boycott of its products. The labor union too joined the legal fight against Danone out of fear of job losses. Finally, the dispute, write the authors, may also have scared other Chinese partners away.
Despite their frequency, business relationships end badly on termination because just like in a marriage, no one wants to visualize parting at the inception. While the bouquets are kept ready for a happy consummation, there are no plans for a situation where the partners agree to disagree and walk away.
