15 Ways To Kill A Deal

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15 Ways To Kill A Deal

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FIFTEEN WAYS TO KILL A DEAL
1. Engage in extensive negotiations over the first Non Disclosure Agreement. Don’t go to the mat on fine details of the NDA that will bring them to the table. It can be superceded later, after they’re hooked.
2. Send “corrected” financials. Never give out financials until you are sure they are what you want to send and/or they contain footnotes and explanation.
3. Prove that you are the only one who understand the business. Demonstrate that a complete, functioning, harmonious management team is in place and that you are superfluous.
4. Leave verbal agreements un-documented. Write-up those handshake stock options, the lease on your cousin’s building, etc. Oral contracts make people nervous.
5. Leave business and personal transactions comingled. Get rid of loans between company and shareholders, jointly owned property, shared insurance policies, etc.
6. Send a sloppy investment memorandum. Don’t release the “book” with errors or omissions. Make it high-quality-less vs. low-quality-more. Have new eyes involved, if not in charge.
7. Prolong the preparation of the “book”. Start early, make assignments, establish final authority, set deadlines, limit the number of editors, don’t waste time re-writing minutia…
8. Try to make the LOI the definitive agreement. Keep it at 30,000 feet. It’s
the only the engagement. The wedding comes later.
9. Use the family lawyer/accountant/consultant. Use professionals who have done it before or you may end up with a “deal-out-of-hell”.
10. Shortchange responses to data requests. If everything asked for isn’t available, explain why and when it will be; and don’t let open items fall between the cracks.
11. Be unable to produce material documents. Before the process starts, locate originals of all share certificates, paid promissory notes, titles, deeds, leases, minutes, etc.
12. Disappear for more than a few days. Be available, or else have a good reason and a deputy left in charge. This is not the time for a Safari or South Seas cruise.
13. Start playing hard to get. Don’t convey that you are renegotiating what’s been agreed-to or are changing your mind mid-process. Know the early symptoms of Seller’s remorse.
14. “There’s something else I forgot to tell you”. Pre-assemble the important facts and communicate them as appropriate, not as an afterthought. Doing the “book” helps surface them, even if they aren’t all in it.
15. Get advice from your friend and relatives. Canvas your friends and loved ones before making a decision to proceed. After that, stick with the professionals.