The Trouble With Pre-Nups

I spent most of the day in the middle of negotiations concerning the "unwinding" provisions of a financial transaction. For you mortals, unwinding provisions are those parts of the contract that relate to how the parties amicably undo a deal after something goes wrong and both parties don't want to go through with it anymore.

Sounds familiar? Well, it's something like a pre-nup. But for a corporate deal worth hundreds of millions of dollars. So like Donald Trump's pre-nups.

There are many delicate issues related to the negotiation of unwinding provisions. First, you have to think of all the bad bad things that can go wrong. Whose fault it will be, and then you figure out how both parties can come out unscathed, or well, at least as close to when before they got into the whole mess. As you can imagine, it is a touchy subject.

"If you fail to fund on closing date, you'll need to pay for all my breakage costs."

"Well, if you fail to deliver on closing date, I can revoke the L/C and draw on the escrow account."

Which is the corporate equivalent of "If you cheat on me, I take the house and the kids."

The trouble with pre-nups (and unwinding provisions) is that you have to look into the future and predict the worst possible scenario. Then you have to discuss the effects of those ruinous circumstances to the deal, este, marriage, and what each party is willing to take. Then you agree on what to do. And the way out may just be be as ruinous as the mess you're in.

It's bad chi all around, but as the time tested baduy saying goes: you need to prepare for the worst. The difficulty is that when the shit does hit the fan, you can't expect yourself to act rationally. But this is precisely what you're assuming when you negotiate pre-nups. You assume that both parties will do the reasonable thing.

Hmmm, as the not so time tested and not baduy saying goes, "Sige, good luck na lang."

I don't see how you can realistically agree on expected behavior during a meltdown. Circumstances like that are impossible to predict, let alone you're reaction to them.