Board games: What to do when a business rival is on the board of the multimillion-dollar co-op you want to buy
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You’ve walked up and down Park Avenue. You’ve made the rounds on Fifth. And finally, after an exhausting search, you find your perfect apartment in your dream building at an ideal price. There’s just one problem: your business rival is on the co-op board.
That may sound outlandish, but it happens more often than you might expect, top brokers say. For some, the Upper East Side is really a small town.
A co-op application is one of the most invasive ordeals known to man. It means disclosing everything from your credit card receipts to the financial health of your businesses. That’s standard, but less than welcome when your arch rival is the one smiling under his or her reading glasses at your business records.
Head for the exit
So what’s a buyer to do? According to Berkshire Hathaway's Larry Kaiser, a longtime broker at some of the city’s top buildings who is listing the penthouse of 834 Fifth Ave., there is unfortunately not much to do but abandon ship.
“If a prospective buyer finds that someone is on the board with whom he has had a confrontation, who has tried to take over his company, or who wants to marry his ex-wife, they should not apply,” Kaiser says. “It’s just embarrassing for everyone.”
That’s because once you’ve applied, you have no recourse. You can only question why your application was rejected if you feel you have been discriminated against for racial, gender, sexual preference, or religious reasons.
“Other than that there is no reason for anybody to tell you while you were turned down,” Kaiser says, adding that you will most likely be turned down. “And now your enemy will see your assets, where you went to school, the whole enchilada. Do you want to disclose that to someone who can’t stand you? You’ve given them ammunition that they would never have had before.”
He says your business rival can find the pettiest reason to recommend that the board reject you, or simply give no reason at all.
Nevertheless, Kaiser says that he has seen the situation occur frequently over the years. He says that it happens more often when there are lots of shakeups in business.
“It used to happen plenty, especially when there were more takeovers of firms and people were making their zillions,” he explains, adding that it’s been relatively quiet lately.
No, really. Walk away
Now, that advice is all well and good, but forgetting about your dream apartment, once found, is no small task for the real-estate-obsessed New Yorker. So naturally, there are those intrepid few who would abandon the advice of their faithful broker and carry on with their bid.
Good luck with that. "Any salesperson with any intelligence” would drop you like a hot brick, Kaiser says.
“I would say, 'Please find another broker,'” he says. “I would never bring someone to a board that wouldn’t get through. My reputation as a professional is at stake. Why embarrass them and why embarrass me?”
Following through wouldn't just waste your time
Moreover, coming to a board that doesn’t want you might make you more enemies than you already have. That’s because once a bid is submitted and the potential buyer goes under consideration, the review process can be quite drawn out, sometimes taking months. If you are going to simply be rejected in the end, you’ve but the seller in a pickle.
The board can only consider one buyer at a time, and, by the time you are finally back out the door, market conditions could have changed. At that point all you've done is waste the time and money of your peers, and co-op boards tend to have long memories.
Finagling the paperwork won't work
Finally, any hope of creatively finessing your package so as to not give up your secrets is out of the question. Boards are scrupulous and “will notice a $72 discrepancy in a package for a $20 million deal,” Kaiser says. Besides, he says, everyone can and will Google you to death these days.
Bottom line: “A co-op is a club, and if the club doesn’t like you, you are finished.”
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