A Pyrrhic Victory

A Pyrrhic Victory is defined as a victory that is offset by staggering losses, to the extent that the victor incurs losses that are equal to or greater than those of the adversary.  Its origin dates back to Pyrrhus, the king of Epirus (now part of present day Greece) who defeated Roman armies at Asculum in 280 B.C. and suffered such heavy losses of troops and commanders that he was unable to amass new officers and troops to sustain the war effort.

Similarly, Pyrrhic Victories can disrupt and derail negotiations in a business transaction.   Buyers and sellers occasionally lose sight on the ultimate objective – consummation of the deal – and immerse themselves in any number of details. “Sweating the small stuff” can entail financing terms, exclusion of certain assets, retention of employees, seller training or consulting, inventory valuation, lease assignments, condition of leasehold improvements, prorating expenses, covenants not to compete, allocation of asset values: small negotiation battles that are waged and won (and lost), occasionally at the expense of losing the war.

Just as Pyrrhus lost sight of his ultimate objective, the defeat of Rome, so the parties of a business transaction need to vigilantly focus on their motivations and ultimate objectives for buying and selling and the prioritized values of what they expect to receive.  Sellers, for example, may be selling due to burnout, lack of capital, lack of successors, health or retirement. Buyers may be buying to gain greater independence, improve income, synergies, additional revenue streams, or tax avoidance.

Squeezing an extra dollar out of the transaction at every step, may be negotiation points conceded and small battles won, but ultimately may echo Pyrrhus’ famous lament, “one more such victory and we are lost”.