The advice that won the meeting and lost the decade

The advice that won the meeting and lost the decade.

I used to take pride in being right. Now I care whether I was right about the right thing.

Years ago I advised a promoter on a structuring matter. I won him a tax saving of around Rs. 40 lakh. He was impressed. I was pleased with myself.

In the same engagement, I was also asked whether he should accept a buyout offer of Rs. 85 Cr for a non-core division.

I said no. The multiple looked low. The business had recent margin pressure. My numbers said wait for a better cycle.

Six years later that division was worth Rs. 22 Cr. The cycle never came back the way I expected. The buyer at Rs. 85 Cr had been right and I had been right too, just on the smaller question.

I had saved him Rs. 40 lakh and cost him Rs. 63 Cr.

That is when I started measuring my own judgement differently.

A technical answer on a small matter is the easiest kind of right. Section right. Method right. Working paper right. It is satisfying because it is provable on the day you deliver it. The room nods. The fee is paid. You move on.

A judgement call on the long horizon is a harder kind of right. There is no working paper that can settle it. You cannot prove it for years. By the time the answer arrives, the meeting is long over and most advisors have moved on to the next engagement.

But that is the call the business will actually live or die by.

I now ask myself a different question at the end of every engagement. Not whether I was correct on the points I argued. Whether I was correct on the point that mattered.

Being right on the small thing is a professional habit. Being right on the large thing is the only judgement worth being paid for.