November 10, 2011

“Make my slice bigger!”

“Fair division, also known as the cake cutting problem, is the problem of dividing a resource in such a way that all recipients believe that they have received a fair amount. [...] For two people there is a simple solution which is commonly employed. This is the so-called divide and choose method. One person divides the resource into what they believe are equal halves, and the other person chooses the “half” they prefer”, tells Wikipedia. The problem gets much more complex for distributions to more than two people.

We sometimes face this problem in our projects in cases with more than two partners in the company of our client. There is a good offer on the table and suddenly one of the partners speaks up: “I want a larger cut than my share percentage allows. Due to this and that reason.” The reasons need not be reasonable. :-)

While selling the shares of my last company one of my partners tried to follow this path. He said, “If I hadn’t been active in the negotiations, we couldn’t have received this price. I deserve a higher share from the total amount.” It is a long story and won’t fit here, but I can say that finally he was the one who received the least amount of money. :-)

If you are selling the company shares and if you have more than one partner, it is advisable to discuss beforehand how “the cake is to be shared”.

To read more about this subject in Wikipedia you can click here.

Leave a comment

Your email address will not be published. Required fields are marked *