Every spreadsheet is lying about something.
Not the numbers — those are probably fine. It's lying about something sneakier: which of them is an asset and which is a liability. A spreadsheet will call something an asset while it quietly bleeds you, and something a liability while it's the most valuable thing you own.
Saying that would get you thrown out of an accounting department. But it's also the truest thing I know about a negotiation table — and it changes what the word "audit" means. A real audit is never about whether the numbers add up. It's about whether the labels on the numbers are true.
Here's what most people do.
A deal lands in front of them already labeled — this is an asset, this is a concession, this is the cost — and they argue inside the labels, haggling over the price without ever asking whether the thing is worth what the label claims. That's the tell of an amateur. Those labels aren't facts. They're wet paint. The best-informed person in the room isn't the one holding the most numbers — it's the one who can paint each item its true color before anyone else even notices.
Meet James Rhee.
He's a first-generation Korean-American, a Harvard Law graduate who never practiced, and a private equity investor who had never run a store in his life. Then, in 2013, almost by accident, he wound up running Ashley Stewart — a clothing chain built for and beloved by plus-size Black women, most of them working-class and moderate-income. To those women the stores weren't really retail. They were community centers.
But the company had gone bankrupt twice.
On paper it had six weeks to live, and every report said the same thing: liquidate, fire everyone, and turn out the lights.
Rhee tells the whole story in his book Red Helicopter — A Parable for Our Times: Lead Change with Kindness (plus a Little Math).
But what he did next was the realest audit that company ever got — and it started with him doing the opposite of what auditors do.
First: he left the building.
He sat with employees one at a time, at a table more like a kitchen than a boardroom — and not to make small talk. He was taking the measure of people. What are you good at? What are you willing to unlearn? Do you actually care how this ends? He listened with his eyes as much as his ears.
Most had learned to keep their heads down; in a company circling the drain for years, floating an idea was a fast way to get ridiculed. So he told them that regime was over. This is a new system. A clean slate. Your reaction is your choice, not mine. Unhappy people, he said, usually fire themselves — and he'd give them the room to do it.
Then he turned to the customers: grandmothers, mothers, and daughters shopping together for what they'd wear to work, to church, on a date night. And he found the one thing a balance sheet has no column for — an intensely loyal community that didn't shop at Ashley Stewart so much as belong to it.
That loyalty was the real asset. Not the inventory. Not the real estate. The relationships. And Rhee didn't treat it as touching — he treated it as leverage.
The balance sheet said the company was worth more dead than alive; the community said the opposite. Those customers would keep coming back and keep spending — future revenue worth more than anything an auctioneer would pay to haul the racks away. So he made his vendors and creditors do that math: a living business that pays you over time beats a corpse you strip for parts today. Extend the terms. Give me room. It wasn't a plea for mercy — it was a better offer, made from a footing they couldn't reach, because he held value they couldn't see. A thousand jobs survived — and that was the byproduct of a valuation done right, not a rescue.
I learned the same lesson in the mud of southern New Jersey.
When my law partner Carl and I hung out our shingle in the mid-'90s, our first big case was a pollution problem at a factory that used to make bathtubs. Our job was to make the insurers pay for the cleanup, and their frame was pure contract: the policies excluded pollution the insured expected to cause, the contamination was sky-high, so obviously the company expected to pollute — no coverage. On paper, they had a case.
So we ran the same audit Rhee did.
We drove down and knocked on doors of neighbors and the retired men who'd worked the line. World War II and Korean War veterans who'd raised their families a few hundred yards from that plant, and would sooner have shut it down than poison the ground their own kids played on. They all told the same story: they coated the tubs in enamel, and when it came out flawed they chipped it off and used the scrap as fill behind the plant. They figured it was basically sand. Nobody knew there were trace amounts of lead in those chips, leaching into the water over decades. That is a very different story than corporate demons poisoning a neighborhood on purpose. One insurer tried the case anyway, betting it could paint our clients as polluters — then those veterans took the stand, and that company got hammered.
We only had that story because we left our desks to go get it.
Walking the floor was only half of Rhee's audit. The other half was the ledger — and here's where it becomes a weapon.
Take the inventory. The books called it an asset — but his own lender was quietly betting on liquidation, which made that "asset" the noose they meant to hang the company with. Payroll, meanwhile — the line every executive itches to cut — was the opposite: an investment in an appreciating asset, as long as the right people were building goodwill. Value isn't a fact you inherit. It's an argument you develop.
So don't accept the labels. Run the audit yourself.
Ask whether the "asset" you're guarding is quietly bleeding you, and whether the "liability" they're sliding across the table is something you'd happily take. The best deals get made when one side trades away what it booked as worthless to someone who knew it was worth a fortune.
And make that trade with kindness — which is not niceness.
Niceness is wanting to be liked, dodging the hard conversation; at a table, it gets you eaten alive. Kindness is colder: respect and honesty delivered straight, even when it draws blood. Rhee fired people, squeezed vendors, made brutal calls — and made every one without contempt. That's the discipline: be impossible to push around and impossible to disrespect at the same time. As Harvey Mackay, who wrote Swim With the Sharks, put it: don't be afraid to smile when you say no.
These three ideas aren't separate lessons. They're one method. Audit the deal in the field, where the truth lives. Audit the labels, not just the math. Then negotiate with firmness and warmth at once. Rhee didn't beat the spreadsheet by being softer than it. He beat it by being more honest than it.
So before you argue a single number the other side hands you, audit the label on it. Then turn around and audit your own side of the table.
What's sitting on your side of the table right now, marked down to nothing, that's actually the most valuable thing you've got?
Remember: negotiation is life.
– Gene
