Steven works for Rida - the Chief Financial Officer of a large company. Rida directs a number of departments and functions within the company, including StevenÆs department which is involved in business acquisitions.
One of the corporationÆs goals involves growth through vertical acquisition of smaller companies. StevenÆs primary function is to lead a team of accountants and other professionals that evaluate potential acquisition targets, conduct due diligence, and recommend whether or not the targeted company should be acquired. Steven has participated in a number of negotiations with Rida involving companies he has identified as good candidates for acquisition. Steven works with Maria who has the same job function as him. A problem was recently discovered involving one of the acquisitions that Maria recommended. The target company apparently misrepresented several material facts to MariaÆs team. These statements were not discovered during the due diligence process, and the deal has closed.
Steven was informed of the problem by Rida. He was instructed to visit the previous owners of the company and to negotiate for a refund of a portion of the purchase price. Rida instructs to negotiate for a $2 million refund, and to use all of his negotiating skills to get this concession. Steven meets with the former owners, and after several days of negotiation, they agree to wire transfer $2 million to StevenÆs employer in return for a full release from any future liability. Steven returns to the office and meets with Rida. She expresses concern and disappointment over the negotiations. She asks Steven why he did not ask for more than $2 million, and why he offered a waiver of future liability to get it. Rida asks Steven for his resignation.
In hindsight, Steven realizes that what he believed were clear instructions from Rida to come back with $2 million were ambiguous. Steven grasps now that RidaÆs parting co
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