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Authentic Deal-Making Authentic Leadership Authentic Negotiating

Capital Structuring – Founders’ and Other Classes of Equity

Are you structuring an acquisition in which the seller’s want to participate in the same class of equity as the buying company’s founders? Or trying to figure out the proper class for retiring partners who are retaining equity? Whatever you’re doing, you’ll find that making the right equity and capital structuring decisions for your business is extremely important.

This week on the podcast episode we talk all about the sort of negotiation options you have. Take a deep dive with us and look into some of the big decisions you’re facing.

Capital Structuring & Founder’s Class of Equity

Acquiring another firm has its challenges. If you’ve done it before, you know how many nuances there are!

For example, bringing in people who want to be involved with the management team of the new entity. Structuring and negotiating this type of deal can pose a number of different challenges.

One scenario we discuss involves a client who is interested in acquiring a firm that offers additional products or services. This deal could potentially bring in 30-40% of the total revenue of the firm. The buyer has a capital structure with a founder’s class of equity. This means that they have certain voting and economic privileges.

One key structuring decision is whether the principles of the acquired company are treated as founders, or if they’ll get a different class of equity. If the acquired company doesn’t represent a material portion of revenue and profit, the decision is easy. (Very likely no founders equity.) However, if they do and are founders of their own firm, then it is a tougher decision. The negotiation to follow might be a bit trickier as well.

Elements like these, as well as the related level of participation in decision-making, are two key factors. Expect to navigate through them in the process of getting more material acquisitions done. When handled correctly, you are much more likely to have them work long-term.

Negotiations like these are completely possible. In fact, both parties can walk away feeling really good about the deal they’ve struck. Prepare well, and try to enjoy the process.

Capital Structuring & Retiring Partner Equity

In many cases, when a partner/owner retires, there are provisions in the company’s operating or shareholders agreement. These provisions ensure a complete purchase of their equity.

There are times, however, when retiring partners may retain some equity. They may want to continue to have some benefit from the continued growth of what they founded or helped to build. It could also be because the company is not in a financial position to buy them out entirely.

There are many decisions regarding the proper class of equity and rights. There are also many preferences about that equity. These decisions are crucial in situations like these. In addition, there are many negotiation solutions.

Figuring out the balance is tricky! You must consider the retiring partners’ right to protect their equity value by maintaining some say over certain decisions. You must also consider the working partners’ needs and desire to be able to control decisions. This is vital for the benefit of the company moving forward. Often, this balance is not easy.

If the retiring partners are founders, they are likely used to controlling decisions. Often it is even more challenging for them to cede control to the next generation. Should you treat the retiring partners more like investors with typical investor controls, or like passive former partners who are just along for the ride?

Often, the practical solution lies somewhere in between. Get the full episode here!

Learn More —

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 30 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out if you’re an authentic negotiator, take the Authentic Negotiating Success Quiz today!

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Authentic Business Relationships Authentic Deal-Making Authentic Negotiating Deal-Driven Growth

Deal-Driven Growth

Stephen Woessner is the founder and CEO of Predictive ROI, host of the Onward Nation podcast, a digital marketing authority, speaker, educator, and bestselling author of two books. He comes from a long lineage of business owners, and the early exposure to entrepreneurship primed him to follow a similar path. After serving in the Air Force for four years, Stephen landed a job with an advertising agency in La Crosse, WI where he became a partner in just three years. There, he honed his craft in digital marketing and devoted his energy to understanding how business owners think, act, and achieve.

Predictive ROI

Predictive ROI has always operated as a digital marketing agency, but over the last ten years, it has transformed into something entirely unique. Predictive’s core services were built to help business owners identify financial opportunities and hemorrhages in the digital space. But recently, Stephen and his team have added podcasting to their service line. Now, Predictive ROI helps business owners build their thought leadership through podcasting and supplementary content, so they can monetize that content with courses, workshops, events, sponsorships, and a variety of other opportunities.

Inorganic Growth in the Agency World

While Predictive ROI’s client base continues to grow organically, the agency is finally at a point where the world of strategic partnerships and acquisitions is finally opening up to them. It means Stephen and the leadership team at Predictive can look into different plays such as acquiring a software company that will increase their analytics capabilities; possibly even absorbing smaller agencies in different verticals with client rosters that are strategically advantageous. But if you are considering inorganic growth as an option, there are a lot of indicators you should be watching to determine if it is the right move.

Will it help you hit your revenue goals within your current timeline?

Are you making the right acquisition or is there a better alternative?

Stephen shares advice for navigating this process in the latest episode of Fueling Deals.

Corey Kupfer is an expert strategist, negotiator and dealmaker with more than 30 years of professional deal-making and negotiating experience. He is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the Fueling Deals Podcast.

If you want to find out if you’re an authentic negotiator, take the Authentic Negotiating Success Quiz today!

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Authentic Business Relationships Authentic Deal-Making Authentic Leadership Authentic Negotiating

How to Handle Inauthentic Negotiating Techniques

In the last few solocast episodes of Fueling Deals, we have taken a look at some of the major talking points from my book, Authentic Negotiating. So far, we have covered the Clarity, Detachment, and Equilibrium framework, the top six reasons negotiations fail, and the five steps to becoming a great negotiator. So, if you didn’t get a chance to read the book or listen to those episodes, I highly encourage you to go back and cue them up; there are a lot of great negotiating tips that you don’t want to miss.

In the latest episode of Fueling Deals, we dive into another topic from my book that covers inauthentic negotiating techniques and how to handle them.

The Empty Promise: Somebody makes a promise that they know they’re not going to fulfill in the end. You may choose to challenge their promise upfront to test its validity, then use CDE to keep a level head while you decide how to move forward.

The Big Fish: There may be a difference in scope or size with one negotiating party vs. the other. This can be approached with the notion that even a small fish has leverage because there are alternative plays, otherwise, the negotiation wouldn’t be taking place.

Nibbling: There is always another ask as you get closer to finalizing a deal. Sometimes a candid response is the best approach and it is okay to call them out for adding new terms. Figure out what needs to happen for the deal to move forward, and clarify whether or not there will be additional terms down the line.

Quivering Quill: Similar to Nibbling but it is carried out at the closing table to apply more pressure on the other negotiating party. Don’t get triggered or thrown off your game; instead, step back and evaluate whether the last minute concession works for you and whether this is someone with whom you want to do business.

Limited Authority: The other negotiating party abdicates the decision-making responsibility because of their position in the company hierarchy. While this may be authentic in theory, it is often used as an excuse. Stay calm, don’t let it affect you and decide whether or not they are the right partner for this deal in the first place.

Even ‘good’ negotiating tactics are supplementary to our core dealmaking framework, and no tactics or techniques can be substituted for fundamental skills. But you will frequently encounter authentic and inauthentic negotiating techniques regardless. The bad techniques reek of shady business practices and low credibility. And while you might never use them yourself, you need to know how to spot and deal with inauthentic negotiators on the other side of the table.

You can listen to the full episode here.

Corey Kupfer is an expert strategist, negotiator and dealmaker with more than 30 years of professional deal-making and negotiating experience. He is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the Fueling Deals Podcast.

If you want to find out if you’re an authentic negotiator, take the Authentic Negotiating Success Quiz today!

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Authentic Deal-Making

Wipe the Slate Clean and Meet Your Goals

With the holidays upon us, we are looking forward to unwinding with our family and friends. But since we are also rounding out the year, the holidays are an opportunity to do a few deals with yourself before closing things out. Many of us fail to live out our New Years’ resolutions and goals because we fail to identify, address and complete the failures, unresolved challenges and limiting beliefs from the previous year. Those things roll over—and each time, the baggage gets heavier, making it harder to carry across the finish line if and when you re-up.

Take Stock of Everything

I have a completion exercise that I perform every year at the end of the year where I reflect on everything that’s happened. We need to take stock of all of our success, all of our failures, and get complete with ourselves about areas where we fell short. Before you re-up, I strongly recommend you do this so you can start with a clean slate. This includes the circumstances and relationships surrounding the unattained goals as well. Shed your limiting beliefs and get complete with yourself because you don’t want to bring any unnecessary baggage into 2020.

Celebrate No Matter What

Everything that happened—good or bad—served you in some way. Celebrate all of it because you deserve to honor yourself for everything you’ve accomplished and learned. By celebrating these events, you subconsciously shift your energy, focus on the wins and lessons, acknowledge yourself and clear the way to start planning and visioning for the next year. Then, it becomes more and more effortless to do visioning exercises from a clear and clean place. By creating an experiential mental image of your ideal future, your mind will start to work backward and figure out the steps you need to take to get there.

Click here to listen to my solocast where I explain more about the year-end deals I encourage you to make with yourself.

Corey Kupfer is an expert strategist, negotiator and dealmaker with more than 30 years of professional deal-making and negotiating experience. He is a successful entrepreneur, attorney, consultant, author and professional speaker. He is also the creator and host of the Fueling Deals Podcast.

If you want to find out if you’re an authentic negotiator, take the Authentic Negotiating Success Quiz today!