Does a Hand Shake Mean Anything to You?

In a recent discussion with a client on the topic of joint ventures, partnerships and teaming arrangements, the concepts of doing a deal on a handshake came up.  We discussed business arrangements that deal with two companies sharing ideas or resources and working together with the ultimate goal of a shared benefit.

We began swapping stories of the work we’d conducted on a handshake.  He shared a recent deal he struck with another CEO based on a very preliminary meeting, but supported by history and reputation.  I shared a similar story of a real estate transaction I once agreed to with a handshake.  In both instances, the legal paper work never caught up to the handshake.  In fact in both instances, the deal had come and gone before the lawyers got involved.

I’ll contrast those anecdotes with another from a large company CFO that felt that most people would engage in shady, fraudulent, nefarious, or negligent behavior if given enough leeway.  He was a very strong advocate of very tight corporate controls and governance.

Now I’m not advocating we toss all contract lawyers into the Chesapeake Bay (there is probably a joke in there somewhere), but I’d like to pose a question for you to consider.

Under what conditions will you say yes to a business deal with only a handshake to support the conditions and consequences?  Under what conditions can those in your organization make the same decisions?

If you are ever wondering about the principals and values of your company, they’ll quickly be spelled out once you answer those two questions.

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