Investment documents and agreements are very key documents in investment making and portfolio management. They are documents that guide the investor /investee, borrower/lender, shareholders, and or management relationships. How effective these documents are especially in preempting, preventing, and resolving conflicts amongst the parties depends on the quality of the advisers, depth, and knowledge of the concerned parties, and transparency & good faith of all parties. I have seen some very well done agreements undone by a wrong assumption or interpretation or even greed by one party. If one party is determined to cheat the other or not meet its obligations, no matter how great the advisers are or robust the agreement is or dispute resolution clauses agreed, chaos and drama always unfold and value is destroyed. The funny thing is if you speak to both sides, each party always believes they are the aggrieved party. Investment making is tough. I have always believed that if I have to go to any of the legal documents to enforce my rights, the deal is lost and value is destroyed so I try and work with investors and people who share the same vision and mindset for the spirit, authenticity, and commitment to the relationship is usually the deciding and a major success factor in any business partnership (and in every day one’s too) and not the documents (which are very important)
One key area of agreement most people gloss over and don’t pay enough attention to is Force Majeure. In layman’s terms, it means “unforeseeable circumstances that prevent someone from fulfilling a contract or meeting its obligations under the agreement” Examples include Natural Disasters and War. While parties may not be able to control the occurrence of these unforeseen circumstances, they can prepare a clear, fair, and mutually beneficial action plan that will be triggered in a force majeure scenario. We are dealing with one of such now as one of the investments (and a major one for us) we were targeting to close in February has a Ukrainian firm as a counterpart. We have worked on this deal for over 9 months and even spent New year in some of the towns now being bombarded. Life happens! Our thoughts and prayers are with our partner and his family and the entire world at large. This war is and its undertones from racism to greed are a test for humanity.
We spent most of February engaging with our stakeholders; building alignment on plans and expectations between us and our investors, facilitating interaction between portfolio companies and investors, working with policymakers to better understand the macro context in geographies where we operate and using all these inputs to finalize our budgets and plans for the year. This slowed down our investment activity in February to 7 deals implying we have done over 20 deals in the first 2 months of the year and hence ahead of our run rate (Target is 100 deals this year)
Again, kudos to the team, let’s march on in March.