Steve Huey’s Blog

In every deal there is a seller, a buyer, and a deal champion.  The seller is you (if you are lucky).  The buyer is frequently a larger company.  The Deal Champion is the person inside the larger company who is pushing and pushing and pushing the deal forward.  This is the person that you as the seller have to embrace and help. 

Deal Champion – The DC is the person in the company that has developed the strategy or insight that makes a worthwhile case for buying your company.  They are swimming upstream – this person is banging their head against the bricks of risk adverse company denizens.  These denizens are people inside the company that are too afraid of losing their jobs than take any risk associated with the purchase of another company let alone yours.  Alas the Deal Champion stands tall, proud, and fights the good fight.  Typically these people carry titles like Director of Corporate Development, Director of Corporate Strategy, etc.

As the seller you have to understand who the Deal Champion is and bid for their attention – first you must sell them on your company and then you can help them sell the buyer on your company.  The higher up the food chain the Deal Champion the easier it will be to get a deal done.  The following are my top four things to try to understand about your deal champion:

1. What is driving the Deal Champion to be involved? Are they in charge of strategy and is your company a key component of that strategy? (Let’s hope so!) Are they looking at five different deals and even if they want to work on yours are they being pulled to concentrate on another opportunity?
2. What is the biggest thing driving the deal – new market, deeper penetration, skills not available inside the company – why are they interested?
3. Who are they – what is their background – you should find out everything you can about the person.  Google them take them to dinner and spend the whole time talking to them about them.
4. Is the Deal Champion directly incentivized to do transactions? As crazy as this seems aggressive growth companies sometimes place a revenue target on the corporate strategy group to acquire. (Home Depot for example during the 2002 – 2004 timeframe had a revenue target for acquisitions in the billions. If the VP of Corp Dev did not acquire the revenue he would not get paid or worse get the axe. – If you are fortunate enough to find a company like this it is like Ed McMann rolling up in a van outside your door.)

If you can decipher the above it should give you a leg up on preparing for the sale.  Remember find the Deal Champion and take care of them.  Treat them like royalty and get them whatever they need.  Help them sell your company inside theirs and reap the rewards of a great transaction.

Everything is the answer I would give you.  There have been volumes of words dedicated to negotiating and negotiating strategies so I am not going to expound on that topic.  I am going to give you a warning.  I have never seen a transaction happen where one side or both wins when Emotion plays any role in the outcome.

If you are buying a company – people call it “Deal Fever”.  The emotions run high and “Deal Fever” grips you and all of a sudden you start assuming away issues that make the deal “OK” or the deal terms “passable”.  Whenever you say, “We have to buy this…” you will end up paying too much.  You will miss something or you simply will not do the things the more disciplined you would do.  Commit to no “Deal Fever”.  If you start getting emotional stop the deal or bring in your trusty attorney.  Usually they will help you think rationally.

If you are selling a company – no buyer can ever “Insult” you.  If they make a low bid simply don’t counter.  Tell them that you are not willing to sell your company for that low of a price but you would be willing to entertain a better offer.  I have seen many sellers get caught up in their own hype and miss out on great opportunities.  One potential seller was offered a sum of money for his company (my boss got emotional in this case and had to have the company – I was the messenger so don’t blame me) that would allowed his great grand children to never have to work.  The seller was 22 years old but he believed the hype – never sold – never went public and his next raise round was a down round.  The company flamed out and it ended up being a $400 million mistake.  Remember – no emotion!  Think about what you want out of your company and what is needed by you and your investors to gain a good return.  Focus on that number – do your best to maximize the number but don’t lose sight of the goal.

Emotion makes people do things for the wrong reasons.  The best example of this is in litigation or divorce proceedings.  Usually the only one that gets rich or is satisfied in the end is the attorneys.  We all have heard at least one divorce horror story.

Bar emotions from your negotiation or have a professional help you.