How Not to Do a Deal

Now over the years I have done a few deals, hundreds. Not the greatest number, but enough to understand what works and what does not. Now I have done these in over twenty countries. I even did a $100 million closing which ran from Athens to Palo Alto, ten hours, seven languages, and it all had to close simultaneously.

Now I have learned what works and what does not.

1. Written term sheets. Yes you put down what you agree to and what you don't in writing. You see words count. They really do.

2. Compromise. Understand what is un-doable and then compromise on the rest. I have even flipped a coin on items which were doable but in contention.

3. Make clear who is negotiating. The person negotiating must have the power to make certain decisions and it must be clear what he must bring back to the boss.

4. Never have the final decision maker in the room during negotiations. You always want time to review.

5. Never, never, allow multiple teams to negotiate. That is a sure way to go unstable.

6. Have your own team together. Keep them focused.

7. Be honest. Loss of trust in negotiations is deadly and a deal killer. Say what you mean and mean what you say.

8. Understand the culture of the other party. Where does he come from, what are his goals. There may be no chance of meeting them. If so walk away.

9. A deal is not a deal until the money is in the bank, for a week! Promises are not deals. The become the basis for law suits. Clarity is only obtained by actions not words. Words is what law suits are about.

10. Focus, focus, focus. Understand what you want, communicate it unambiguously, and act honestly.

Now look at the current budget process. It will fail. Then what. Experience is essential, egos must be set aside, and some form of pragmatism must apply. Look at the Palestinian issue, there is a clear solution, namely do something, and then get more, but you may not be able to get everything up front. Same for the budget and deficit and debt limit.

Hennessey has been doing a great analysis of the politics of this issue. Those interested in the details should read his write up. What comes to the fore are two things; an committed idealist with no real life experience will have a tough time, and if they are also possessing of a great ego, it may never work.