Knowing if there is business to be done is far more art than science, even in the age of spreadsheets and endlessly detailed computer-driven analysis. Ultimately business deals come down to two people reaching an agreement, and where people are involved, there either must be expertise or a well understood process if either side expects success.
Prepared to Deal
One of the most important and time-saving aspects of putting together a business deal is known as “qualifying” the counterparty. This is when you or your agent “size up” your counterparty and determine if they are prepared to negotiate, sign and close a deal. The first question in this process is fairly obvious: Does your adversary have the authority to sign a deal? It might seem like a question that doesn’t even need to be asked, but sending a representative who has to “check with the home office” for every decision including the shape of the negotiating table is a time-worn delaying tactic that can be a fantastic time-waster for you and your side.
Second, if your counterparty shows up without legal representation or a financial advisor from a company like Business Credit and Capital, it should rapidly become obvious they simply aren’t ready to do a deal. It’s either that or they are reckless enough to put their company or wealth at risk.
Time Limits
Basic negotiating strategy dictates you must put a time limit on everything you practically can. Offers, requests for information, authorizations and so forth must be demanded complete by certain dates otherwise you run the risk of letting your counterparty run the clock on you. Time is money, and the longer your deal negotiation takes the more it’s going to cost you.
Note this provision applies equally to the overall deal, so item two on your checklist should be an overall time limit on the entire process. Get it agreed to in writing ahead of time and you’ll be that much closer to a successful agreement.
Professional Advice
Items three and four on your checklist are sign-offs from your attorney and accountant. Competent legal advice isn’t just a good idea for your adversary. You need your professional advisors to green light any deal you make for a wide variety of reasons not the least of which is to make sure you aren’t being cheated contractually or financially. If you are an officer in a corporation this is of particular importance as you may have a fiduciary responsibility to your shareholders and board.
If you expect your counterparty to show up prepared to do a deal, you need to be prepared as well. Bring your advisors and don’t be afraid to run the deal past an experienced company like Business Credit and Capital if you want a truly objective take.
Every deal is different. Where some negotiations might hit every checkbox on your list, others might start in left field and just keep running until the sun goes down. Your job is to play your cards tight, listen to your advisors and protect your side. No deal is worth overextending yourself and ending up having to work twice as hard to dig yourself out of a hole.
Having a deal checklist is an excellent idea, especially early in your career when you are most likely to sit down with a built-in disadvantage. Take your time writing it, because mistakes made at your kitchen table are a lot easier to fix than the kind that require a shareholder vote.