As I discussed in Episode #134, there are 10 steps I consistently promote for deal preparation and readiness. Combining these steps will lead you towards deal-making success! Having already shared the first five, in this solocast I’ll focus on the five I had left to cover. Listen in to learn about how you can take advantage of the repeatable, scaleable deal-making opportunities.
The First 5 Steps Towards Success
Our first five steps from the last solocast were:
- Know Why You’re Making the Deal
- Determine Who You Are Targeting
- Build Your Value Proposition
- Get the Right Resources in Place
- Choose a Deal Model
If you haven’t had a chance to listen to that one yet, please do! Those first five are really the foundation you’ll want to ensure you’ve set before you move forward.
Step #6: Choosing a Deal Structure
A lot of people want to jump to this step first! They’ll have a deal on the table, or be considering a deal, and they’ll already be focused on their structure. It’s always one of the first questions I get!
When asked, however, I always bring clients back to steps 1-5 before I spend time on establishing structure. If you don’t know the basics, like why you’re making the deal, what the value prop is, and what resources you need in place, then you’re not ready to be establishing a deal’s structure yet.
Finally, you’ll want your deal model in place before you choose a structure. The model gives you a template that allows your deals to be scalable and reproducible, which is key to making strong deals.
Once you know your model, then you’re in good shape to start structuring your deal. This includes legal documents that reflect that deal structure. We can take care of all of that before a deal is officially taking place. Even if the deal is already underway, we always encourage clients to use this opportunity to let us draft a series of template agreements that can be used going forward. The advantage to having these template documents is that you put yourself in the position to make powerful deals (and take fast action) in the future.
Although there are many more details regarding deal structures, this is the basic overview that will help you understand why it’s not a first step.
Step #7: Enter the Due Diligence Phase
General due diligence takes place even before you have a deal in place, and includes how you find people and what you need to know about the industry. It might also include locating conferences, finding professionals you’d like to work with, such as lawyers and brokers and bankers, and preparing internally for the deal.
If you’re already in a deal-making discussion, you’ll also want to do the necessary due diligence with your possible partner. You should thoroughly check any person or organization you’re considering making a deal with, whether it’s a joint venture, acquisition, or something else altogether.
Other areas to do your due diligence include legal, financial, cultural, systems/integrations, technological, investment approaches, and more. Be sure to think through what your situation calls for!
Step #8: Start Negotiating
This is an area I’m passionate about, as witnessed by my best-selling book, Authentic Negotiating, and the many podcasts I’ve done on this topic. This includes both actual negotiations and the process of getting the deal officially closed.
If you have a few deal-making templates based on your structure, for instance, this may be where you make some tweaks and customize the deal to the person or company your working with. Although you need to remain open to who you’re working with, you also want to balance your own needs and process against that.
Ideally, you won’t fundamentally alter your deal-structure during this process, because you want to be able to use those templates to make deals scalable and repeatable.
Once negotiations are done, ideally your lawyers are able to complete it easily using the templates you’ve already put in the work to create.
Step #9: Think About Positioning
Once you’ve closed your deal, you’re not done yet! (Even though it seems like it might be.)
Even before you close the deal, you want to start thinking about positioning. This includes how you’ll announce the deal within your industry or marketplace. You should think through how you’ll want this communicated, and how you want it to be received.
If you’ve completed a merger, for instance, you should be communicating about what major partners may be staying on (or leaving), how you’re going to talk about it, and what you want the market to know from your part of view. You may also need to consider how your deal partner would like this positioned.
In addition, you’ll want to consider internal positioning. Often high-level executives are at the deal-making table, but there are many employees and personnel who are going to be impacted as well. How can you position the changes well and create employee buy-in so that you can retain (or begin creating) a strong shared culture.
Your people may be worried about increased workloads, new technology, changes to the pay scale, or decreased opportunities for promotion. Positioning is a way to address these things and create positive momentum.
Step #10: Start Integrating
Acquisitions, mergers, and many other deals require many parts, pieces, and team members to integrate. From choosing a cohesive CRM to selecting a method for communicating between team members or closing out a sales process, you’ll need to ensure that you have a strong integration plan.
Affiliate deals, joint ventures, and more also require integration because they’re asking people to work together. So many clashes, including technological and financial, can keep an otherwise great deal from succeeding. It’s vital that you’re taking the necessary steps to ensure that you’ve planned for your deal to last long into the future.
When you follow these deal-making steps, you’ll position yourself for long-lasting, successful deals. That’s the best way to ensure ongoing success.
Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!