A personal guarantee is not a promise that you'll try hard. It's a bet on how much of the world you control.
Most people who sign one look at the number. The number is the wrong thing to look at. The number tells you how much you lose. It doesn't tell you whether losing is up to you.
There are risks you can manage — your financing, your performance, your timeline. And there are risks that sit entirely in somebody else's hands.
Both get written into the same contract, in the same font, backed by the same dollars. Only one of them is still a bet you can influence after you sign.
Consider what's happening right now to David Ellison, the head of Paramount Skydance, who is trying to buy Warner Bros. Discovery for roughly $77 billion in equity value — north of $110 billion once you add the debt.
Warner's board had already turned Paramount down more than once. It had a signed deal with Netflix. And when Paramount came back with a higher number, the board still said no. The objection wasn't price. Paramount's price was better. The objection was risk — Paramount's debt load, and the sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi helping to fund the bid. Your money's good, the board was saying. But you're a dangerous counterparty.
Ellison did not make the bid less risky. He collateralized it. He raised the regulatory break fee to $7 billion. He volunteered a ticking fee — an extra $7 million a day for every day the deal stayed unclosed past October 1st — as a way of demonstrating how fast he expected to clear. Nobody asked him for that one. He raised it twice himself. And he got his father, Larry Ellison, the founder of Oracle and one of the wealthiest people alive, to sign an irrevocable personal guarantee that eventually reached $45.72 billion, jointly and severally with his family trust, plus a covenant not to revoke that trust or move its assets while the deal was pending.
It worked. Netflix declined to match at $31 a share. The board declared Paramount's offer superior on February 27th, 2026, and paid Netflix its $2.8 billion break fee with Paramount's money.
Then the approvals came in. The Justice Department cleared the deal. The European Commission cleared it. The UK cleared it. Sixty-six jurisdictions around the world cleared it or declined to challenge it.
And on July 13th, twelve state attorneys general, led by California's Rob Bonta, walked into a federal courthouse in Oakland and stopped the whole thing cold. There's a restraining order in place. Trial is set for March 2027. The $7 million-a-day clock starts this October.
Now look at what Ellison actually guaranteed against.
There is no financing condition in that agreement — Paramount cannot walk away if its funding falls through. That's a real risk. It's also a manageable one, because Paramount controls its own financing. It can call its lenders. It can call its investors. It can call Larry.
It could not control twelve independently elected law enforcement officers in twelve different states. Not at any point, not by any means. And that is the exposure that actually materialized.
You can guarantee your own performance. You cannot guarantee someone else's permission.
You're never going to guarantee $45 billion. But you may well sign a lease, a note, an earn-out, or a bank loan with your name personally on the back of it. Before you do, write down the single worst thing that could happen if you sign, and then ask three questions:
- Does this get triggered by something I control, or by something someone else decides?
- If it does get triggered, can my business keep operating?
- Who do I call for relief, and do they have any reason to give it to me?
Ellison didn't fail to read the penalty clauses. His side wrote them. He understood the downside better than anyone else in the transaction. What he didn't have was a name to call when the thing he couldn't control came true. Rob Bonta was never at the table. Nothing in the merger agreement told anyone he existed.
So look at whatever's sitting on your desk waiting for your signature. Who has to say yes before it works out — and have you ever met them?
If you can't name them, you're not negotiating. You're gambling.
Remember: negotiation is life.
– Gene
