The Stupid Bridge
The last time I wrote about lessons learned from a bridge, it was when they blew up the one in Rocheport, Missouri. That, however, was a much more entertaining story than this gut punch about Joan and Marc Hendel, who bought a piece of land for $165,000, built a $500,000 house on it, and now might lose it all to eminent domain.
See, the land they bought sits near the Sagamore Bridge, which connects Massachusetts to Cape Cod. Traffic there has been a disaster for decades, and nearly everyone in the Northeast probably had some idea that it could – and should – be widened.
The Hendels, however, were moving to town from Iowa and bought the property “sight-unseen,” which is not good diligence. Further, while nearly everyone in the area, including the seller and the real estate agents, knew that there was a chance the land could be claimed for bridge expansion, nobody told them.
“They gotta be stupid,” a neighbor thought. “I never thought they were from out of town. I figured someone would have told them.”
I wonder if they asked?
It should go without saying: when acquiring a large, illiquid asset, do your homework. And while uncovering obscure and esoteric risks is fun (and also important), a key part of any due diligence process is asking and getting answers to stupid questions, too.
A stupid question is a basic one that you put off asking for fear it will make you look like an idiot, but that’s necessary for foundational understanding. For example, “We’re from out of town. Are they thinking about expanding that bridge that needs expanding?” Or the time we asked, “Do your employees actually work for you?” to a large service firm only to discover that not only no they did not, but none had verified immigration status either (that double revelation killed the deal).
But deal heat and competitive tension are real, and sometimes there are questions we assume don’t need asking. But I’m consistently surprised how much information – even from well-meaning people – doesn’t get volunteered unless you ask.
– Tim
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