Reasons Deals Die!
So lately, i’ve been involved in a number of negotiations that have died. Now all of these deals actually made sense to both parties but they died for various reasons. Here’s some tidbits of what i’ve learned from simultaneously doing a number of deals and many of them falling apart.
1. Don’t assume your counter-party must do the deal. Often times there are other options you didn’t know about.
2. Make sure you know why you are doing the deal. If so, stick to it, even if you smell weakness, exploiting it too much may kill the deal. Focus on your initial goal and make sure it gets done.
3. Always get paperwork as soon as possible. Don’t wait on the promise of a contract or term sheet. Walk away if they delay and tell them to get back to you when they are serious. Yes, this may offend people but it will put the pressure on. Do it subtlety. Don’t let people waste your time.
4. If your counter-party keeps rescheduling meetings, the odds are they aren’t interested. Even if you manage to do a deal, do you really want a partner who doesn’t take you seriously.
5. Have a lawyer handle negotiating terms. You negotiate price, lawyer (or banker) should be negotiating terms. There’s a simple reason for this. Your emissaries can get away with saying things that you can’t. Blaming your accountant is one thing, having your accountant say it himself is another.
6. Never use email to negotiate. Always do it in person or over the phone. Context is often lost in email.
7. Once again, know your goals and go for them. Set false barriers a little above what you want so you have wiggle room and also make sure some terms are a little out of this world. Not crazy but out there. Why? Get your counter party to negotiate terms instead of the main point of the deal. It will help you get some compromises you may not otherwise be able to get. Though remember your purpose, your goal isn’t the little terms, it’s the core deal.
8. Cash is king. Less cash today is worth more than more cash tomorrow.
9. Don’t agree to terms where you are selling the company and the buyer has a dozen ways to return the company. That’s not a sale. That’s a free option to the buyer to return the company and basically a money back guarantee. You are selling a company to get out of it not to be screwed around with.
10. Short emails are better than long emails. Less is more. More makes you seem a little bit crazy (as I suppose I am)
