The final presentation at this year's annual INREV conference, which ended earlier today in Athens, was entirely appropriate.
Dr Fons Trompenaars, a Dutch management consultant, ended the two-day event with a presentation on how corporations can best manage the dilemmas of an economic crisis.
It was appropriate not least because the word “dilemma” comes the Greek “di” meaning double and “lemma” meaning proposition. For the 420 delegates attending the conference though, it's appropriate because they face so many dilemmas of their own, none of which are palatable.
Take the GP, for example, who has an LP telling him not to invest because he doesn't want to meet any capital calls. One choice is for the GP to turn around, accept the decision and suspend investment for a year. But if the GP does that, shouldn't the GP also take a cut in the management fee?
The other choice is to go ahead and invest in a deal knowing that the fund faces a problem with one investor not playing ball. No-one, though, wants a fight.
A linked dilemma for the GP who doesn't feel the time is right to invest yet is whether it is good enough to tell investors: “I haven't done anything with the money you committed 18 months ago”.
The GP knows that if he reaches the end of the investment period with no deals, then the fee structure is such that he will earn zero. On the other hand, if does he jump into the market he potentially sets himself up as the guy that everyone calls a chump because the market fell another 10 percent following the acquisition.
Then there is the dilemma of what senior partners do with the hungry deal guys at his firm. Does he tell his professionals to stop looking for deals (tantamount to admitting there will be no bonus this year) or does he tell them to keep looking and pretend to be interested, knowing that they might later uncover the cunning truth that in the end he will always say no to everything.
The list of dilemmas is seemingly endless, but on the last example, part of the answer is surely integrity. Tell the investment guys they need to keep in the market looking at deals because they need to understand what is happening out there. The possibility is that the deal will come back a year later anyway perhaps when the seller will accept a reduced price.
In his presentation, Dr Trompenaars said cultural differences often determine our approach to dilemmas. He used the simple scenario of a friend who witnesses a car crash that kills a pedestrian. How much should that friend be expected to cover in court for his friend?
Dr Trompenaars said one solution was to get the friend to be honest in court, thereby avoiding the dilemma himself of lying on oath or not being a loyal friend.
Delegates leaving Athens are hoping this kind of constructive approach can be applied to their own problems upon. There are no easy answers, of course, but being dishonest is probably the worst thing you can do.
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