Tag Archives: FUDG

Managing the FUDG factor in a Hold or Fold decision

Norbert Schwarz
Norbert Schwarz

Fear, Uncertainty, Doubt and/or Greed (FUDG) often play a major role in a family’s decision to keep or sell the family business.  Managing these emotions in the decision can have a powerful impact on the success of the process.

Several steps can be taken to manage the first three elements of the FUDG factor to the extent needed to make an informed hold or fold decision. Educating family shareholders on the products, the competitive environment, and the challenges and opportunities of the business is a good starting point. Encouraging family members to be informed on business issues in general can also help those not in the business better understand the current and future business environment in which the company operates. If the company has embraced a comprehensive strategic planning process, management should be well aware of these subjects. The planning process should also clarify the company’s vision for the future and outline its plans to achieve that vision over time.

An outside board I worked with recently had a policy of asking shareholders to discuss and communicate to them their long-term vision for their ownership annually. This was done before the board reviewed and approved the annual revisions to the company’s strategic plan. Building value and growing the company were the focus for many years until the shareholders responded unanimously that they wanted to prepare the company for sale within a three to five year timeline.  A successful, fully priced sale was accomplished in less than three years.

The Greed factor is a bit more problematic. There is a difference between greed and rational self-interest.  The need for individual financial security may become a key driver in the decision process. The question that arises is “what is enough?” When that question cannot be answered rationally, an element of greed becomes suspect and may lead to conflict before, during and after a hold or fold decision is made.

Fear, Uncertainty, Doubt, and to some extent, Greed may always be present in one form or another in every hold or fold decision. The key to success, whether the decision is to hold or to fold, is to manage these factors effectively.

A Banker’s Dozen of Life Lessons Learned

Norbert Schwarz
Norbert Schwarz

In my 50 plus years in banking, business and consulting, I have been blessed to have had the opportunity to work with scores of families and mentors who have taught me a lot about getting along in the personal and business world. While I have not always practiced the sage advice given, it has served me well over the years. I would like to share some of those gems with you and ask that you share any that you have found particularly helpful in furthering your successes.

  1. Build your foundation on trust.
  2. Be able to shift gears.
  3. When considering the hold or fold strategy for your family business beware the FUDG Factor. (Fear, Uncertainty, Doubt and Greed)
  4. When you are up to your elbows in alligators, remember that your objective is to drain the swamp.
  5. Don’t try to push a string uphill.
  6. Don’t fight people who buy ink by the barrel.
  7. Fix the process and not the blame.
  8. How you say it often means more than what you say.
  9. Learn to love details. The devil will often appear in them.
  10. Know your bottom line before entering into a negotiation.
  11. Keep it simple.
  12. Never leave anything, always go to something better.

Thank you for indulging me in a bit of nostalgia. I look forward to hearing from you on your life’s lessons learned.