In prior columns, we’ve addressed how to prepare for a divestitures or acquisitions and how to ascertain value. With the last column of the series, we’ll discuss how to get a deal done.
Choosing the right strategy for your specific situation is critical to your success. Whether you’re buying or selling, hiring or being hired, you’re engaged in a deal-making which is the result of a combination of design and negotiations. Here are some considerations:
What Do I Give?/What Do I Get? Be prepared to answer these questions for all parties in the transaction, including secondary level parties. For instance, you may clearly understand what you get out of a transaction and what your future partner will get. But how will the deal affect the office manager? The staff? What about your respective spouses; or vendors, etc.?
Make Sure Time Is on Your Side: Never allow yourself to be placed in the position of having to do anything. When time is on your side in a negotiation, you have a much better chance of coming out on top. But, more important, the odds that you’ll make an error are significantly reduced. Deals take time. Even simple deals have as many as six parties involved (you, the other side, both of your accountants and attorneys). Even a simple employment contract can take six months to develop, review and execute. Don’t be caught short on time.
Document the Deal: Every transaction, partnership relationship and employment relationship should be backed by a written agreement (yes, even at-will employees should have a work agreement). If you can’t get an agreement completed, the odds are that you’re going to have a problem down the line. I’ve heard this response on many occasions, “Yes, we have a contract ... it’s just never been signed.” Well, an unsigned contract is just a collection of thoughts. Get it in writing!
Too Many Cooks Spoil the Broth: While I always recommend surrounding yourself with good advisors, the inverse can be a problem, too. Deal-making is an art form. As with all art forms, the process is subjective. There are no rules except on the tax and legal side and even those are often subject to interpretation. Thus, if you’re not confident with your business skills, you can find yourself having to navigate conflicting opinion. Find yourself one experienced individual who can help you navigate these uncharted waters.
Always Look for the Win-Win: If you think you can pull the wool over the other party’s eyes and get away with something, forget it. Likewise, if you are feeling that you’re not getting the best situation for you, walk away. How individuals act in negotiations is very telling about the future of your relationship. In many respects, an employment agreement or transaction document is like a prenuptial agreement. If you can’t work it out up front, the odds are that the relationship won’t work, either. Further, in today’s litigation hungry world, any deal is subject to turning ugly. If all parties to the transaction aren’t focused on a balanced set of terms and economics, then it’s a good sign that the relationship will not evolve as you desire. Beware!
At the end of the day, every transaction, every partnership and every employment relationship is unique. Make sure that you’ve done your homework. Never, ever adopt someone else’s contract as your own. Those kinds of shortsighted actions are what keep consultants, attorneys and accountants in business.
This article originally appeared in the July 2016 edition of INVISION.
Alan Cleinman is the founder and CEO of Cleinman Performance Partners, a consultancy for optometry practices. This three-part series is based on his book A Different Perspective: An Entrepreneur’s Observations On Optometry, Business And Life. Proceeds from the book benefit state optometry PACS. Learn more at invmag.us/acbook.