BVP : A story of Mechan Nikel Engineering Consultancy Sdn Bhd
Mechan and Nikel were good friends. They were both very good engineers and they started an engineering consultancy firm 10 years ago. In the early days, they worked 16 hours a day and 7 days a week and until 1 year ago, thanks to their past tireless efforts, the firm has grown to a RM10million-a-year business.
One day, Mechan had an accident at the site and died on the spot. Initially, there were some disruption to the operations of the firm. Since all cheques require both Mechan and Nikel’s signatures, the firm was unable to pay its suppliers and workers’ wages and salaries. Some suppliers were kind enough to extend the credit terms, but a few stopped delivery of some crucial materials causing delay in some of the ongoing projects. The firm had to pay huge liquidated damages to the main contractors. The widow of Mechan begged Nikel to continue to pay monthly allowances to the family as they really needed the money for their daily expenses. Nikel was able to accommodate for the first few months, but as the effect of the loss of projects and payments for liquidated damages set in, the firm no longer had the cashflow to pay the allowances to Mechan’s family. Nikel was faced with increasing workload as he needed to take care of the job functions which were previously Mechan’s responsibilities. The firms’ staff were also leaving in droves due to lack of confidence in the survival of the business. Mechan’s widow was seen coming into the office every other day to see Nikel to ask for payments. Whenever Nikel was unable to pay her, she had no choice but to persist and share her unhappiness with all her friends and relatives. She suspected Nikel was not honest and had betrayed her. One day she asked Nikel to buy over the shares of the firm she inherited from Mechan. Since she knew that the firm was worth at least a few million ringgit, she demanded RM3million from Nikel. Nikel told her the truth, that the firm’s business was going downhill ever since the demise of her husband, and he can only offer her RM300,000. She refused and went on to seek legal advice.
To cut the long and sad story short, eventually Nikel was forced to set up a new company called Nikel Engineering Consultancy Sdn Bhd, taking along with him all the clients of his former company. Today, Mechan Nikel Engineering Consultancy Sdn Bhd is in the process of winding up. Mechan’s children stopped studying in a private school and his widow was last seen going for job interviews. She was a full time housewife up till a year ago.
Conclusion: as we can see, the chances of the above event happening is very real. The best way to avoid such a mess is to ensure that a proper Business Value Protection Programme is in place.