Just because you’ve been in talks doesn’t mean the deal is done. Entrepreneurs need to remain diligent about timelines in order to ensure that the deals they’ve set in motion actually come to fruition. If you’re negotiating a term sheet, building a partnership or on the verge of an acquisition, get the papers signed. Legendary GRP VC investor Mark Suster has seen his fair share of successful deals, and he writes, “don’t pop the champagne until the ink is dry on the contract and the money is in the bank.”
Suster wrote a great post on the need to close deals in a timely manner. While it’s important to negotiate well, he’s seen firsthand how deals can go up in smoke if given too much time. Suster raised a round right before a market crash and is convinced that if he’d waited even a month, his offers would have been rescinded. He explains that market crashes, deal fatigue, complacency, or losing your deal sponsor could mean the difference between a banner year and a missed opportunity. Some suggestions to expedite the deal process include:
1. Don’t Over Shop: Although a healthy interest from a number of players is important for leverage, shopping around too much has its downside. Says Suster, “There is a fatigue factor. If deals drift, people start whisper campaigns. It is a tight-knit industry. Like it or not everybody knows each other. ” If you haven’t closed a deal in a timely manner others may assume something negative is holding you back.
2. Don’t Grind Every Detail: Know the important points that you want to negotiate and stick to them. He writes that you shouldn’t get caught up in inconsequential details as they’ll potentially add weeks to the legal process and you’ll risk creating ill will with your newfound partners.
3. Don’t Be Complacent: Suster suggests that you hold all those involved to their deadlines and ensure that lawyers get the documents out when promised. If someone is behind, call them and let them know you are both interested and that you’re willing to fly out and meet them or take calls in the middle of the night to acommodate them.
4. Get People In Person: Put yourself, your negotiating partner, both sides of lawyers and the other party in a room to hash out the details. Suster stresses that it’s important to create goals for what you want to accomplish and take breaks to gain consent from any higher authorities.