A Guide to Ethics

On the way up the ladder there is always a temptation to skip a step, to take a shortcut. When someone gets hurt, then problems begin.

Within the M&A industry, we know there is a problem:

  1. When a seller withholds information under the rationalization of “caveat emptor”.
  2. When a buyer hires a key employee from a seller and justifies his action because “recruitment” was not specifically prohibited in the Confidentiality Agreement.
  3. When an intermediary intentionally overestimates enterprise value of a prospective selling client in order to get the account.
  4. When a lender delays credit approval and enriches its financing terms knowing the borrower is under time pressure for a closing.
  5. When an employee violates the duty of loyalty to his employer and walks away with trade secrets, customer lists, and inside information.

We know as an industry and as a society we have a problem. Some of our “professionals” have a dilemma with a lack of backbone and an absence of ethics.

As leaders in our M&A industry, we must consciously regain and renew our commitment to the importance of basic values.

In the research of ethics, Raymond Baumhart asked businesspeople, “What does ‘Ethics’ mean to you?” Among the replies were the following:

  • “Ethics has to do with what my feelings tell me are right or wrong.”
  • “Ethics has to do with my religious beliefs.”
  • “Being ethical is doing what the law requires.”
  • “Ethics consists of the standards of behavior our society accepts.”
  • “I don’t know what the word means.”

From Baumhart’s research we know one thing with certainty: The views many people have about ethics are shaky.

Most people think that obeying the law, complying with company policy, or following the Golden Rule is sufficient. But laws, policies and general rules have loopholes. Whoever said, “Rules are meant to be broken” may have had good intentions to promote risk taking, but breaking rules for self-gain is unethical. An unethical action or belief can harm others and/or benefit the instigator. The resulting harm can be financial, psychological, or physical. All can be devastating.

Businesspeople as a group are often perceived to have doubtful ethics. Businesspeople don’t help their cause when they rationalize that their actions are “not a matter of ethics, but of business”, or when they point out that they are “just doing their job.” Being paid to do the wrong thing does not make it ethically acceptable.

So how do we know if actions or beliefs are ethical?


Dr. Diane McNulty, Associate Dean at the University of Texas at Dallas, has suggested that businesspeople commit three simple questions to memory.

As a personal reference check for ethics consider three questions when faced with a troublesome decision:

  1. Is it legal?
  2. Who will benefit?
  3. Will anyone be hurt?

By committing the above Ethical Guidelines to memory and questioning ourselves when facing a troublesome decision, we can determine for ourselves what actions are or are not ethical.

As individuals we must internalize ethics. Government cannot make laws to force ethical behavior.

The goal of ethical training is to teach awareness. Ethical awareness causes people to understand the differences between good intentions and right acts. We must adopt and foster ethical awareness as a widespread organizational value.

Perhaps the biggest difficulty with ethical training is that no one thinks they need it! Awareness is the first step toward resolution – one businessperson at a time.

So as we lead or follow, ethical awareness causes us to reflect and choose when facing a troublesome decision. Can you now recall the above Ethical Guidelines – from memory? Answer: Reread and commit to memory the bolded words above.

As leaders and followers our own self-esteem and the way other people perceive us is dependent on how we practice ethics in our daily lives.

As leaders and followers we must speak up and act in ways to show that ethical behavior is the bedrock of our values; and therefore, our actions. Be ready to set the example. It is uncomfortable to ethically lead in a non-ethical venue. I have seen people alter their choices. Comparing a nominal gain with the fear of loss may encourage better choices. How do you put a dollar sign on the loss of reputation? It takes a gutsy, confident businessperson to articulate and lead with ethical actions.

May I appeal to you that it is not enough to read this article, memorize the bold words, and feel good to know the Ethical Guidelines. The heart of ethical behavior is in personal action. As leaders and followers we must stand up for what is right. It is necessary to increase peoples’ awareness of ethics. Educate people by talking about your practice of ethical principles. Prove your ethical practice with confirming actions. People want to be shown. People need to see. Each one of us can make a difference. It is imperative that we never, never give up.

Mr. Lemmon is President of C.V. Lemmon & Co., Inc., an entrepreneurial investment bank in Dallas, Texas. C.V. Lemmon & Co. was founded in 1983 and has advised numerous regional clients on sell-side representation, buy-side representation, and corporate finance. Typical clients have enterprise values ranging from $5 million to $100 million. He can be reached at (214) 692-7248, ext. 106 or The firm’s web site is

Leave a Reply

Your email address will not be published. Required fields are marked *