Top Ten Tips For Entrepreneurs

Entrepreneurs often find themselves in the negotiations, a high-risk with large, savvy players, with the power of negotiating large (hereinafter referred to as the “Big Boys”) – Whether it’s a venture capital firm in connection with the financing or private equity firm in connection with the selling business owner, it can be a daunting situation in fact. Here are ten tips for entrepreneurs to help them through this process.

1. First Tip for Entrepreneurs is to Maintains A Strong Team

In deal making as is the case in business, you’re only as good as your team. Accordingly, the first step of the project is to maintain a strong team deal – and center in the team must be a corporate lawyer with experience. In fact, will counsel companies experienced not only add value to the transaction, but it can also help the entrepreneur build out the team and designed according to the deal specific (for example, in the process of acquisition, a lawyer taxes powerful must help structure a deal or in the treatment of the license, a strong IP lawyer is often necessary, etc.). Big Boys are represented in general, and the law of large companies aggressive, and the project owner must ensure that his / her team is up to the task.

2. Do Your Diligence

Due diligence and is often a critical component of any agreement. One form of diligence that is often overlooked, however, is the investigation of the men on the other side of the table. What is the big boy reputation – for example, this is a capital project or private company shares of companies that deal with the portfolio well or that the company, which compresses the little guy? And what about the individuals who you are dealing? What is their reputation? They are good guys who have a partner or are they jerks? In fact, the Internet is a good starting point for the businessman who needs to basic information about a particular company / individual. At a minimum, the project owner must track other entrepreneurs or CEO who did deal with the players on the other side of the table and make an informed judgment on whether they are men who regulator wants to do business.

3. Create A Competitive Environment

There is nothing that will give the entrepreneur more leverage in connection with any negotiation with the big boy of the competitive environment (or the perception of himself). In fact, every investment banker worth his salt understands this simple proposal. Accordingly, and start seeking a Series A financing round of venture capital firm, for example, it will be clearly more attractive if the company was interested to learn venture capital firms other in the beginning. Not only validate the thinking of competition for the company, but also appeals to the human nature of the individuals involved. In fact, everybody wants what has not and / or what someone else wants. Will be severe pressure regulator in relation to the price and other physical conditions as competitors played off of each other, and thus strike the best deal possible. One caveat: As shown below, it is probably best left to a strong corporate lawyer to play this game on behalf of the owner of the project, but you must carefully this strategy, best handled by an experienced person.

4. Negotiations Run Through Lawyers

Business man must do what he does best – any building companies – and leave the negotiation on strong corporate lawyer. Entrepreneurs are usually not eligible for a sophisticated venture capitalists or private equity or corporate development guys who do presentations for a living. Accordingly, the smart business man to stay above the fray and let him deal operators lawyer. The Big Boys may try to run end-around lawyer entrepreneur (and maybe even criticize the lawyer and try to turn the regulator against him), but should remain a businessman disciplined and avoid negotiations “sidebar” with the principal (s) on the other side. This thinking pattern is specially important as the project owner will have an ongoing relationship with the other side after closing, and the goal is thus not to poison the relationship with distemper, tough negotiations (ie, let the lawyers fight it).

5. Develop A Game Plan

Every deal is different – different players, different bargaining power and the various risks, the timing is different – and therefore it is important that the project owner to sit down with his treatment team and develop a strategy; short, he must develop a game plan and then try to execute the plan. In fact, doing deals is no different from any other project: the businessman must think through the issues with, and experienced team of smart, reasonable set milestones and then monitor progress. Careful analysis and throughout this process is paramount.

6. Be Careful With The LOI

A letter of intent (the “LOI”) – sometimes referred to as a term sheet or memorandum of understanding. Entrepreneur must have to understand that depending on the deal and the context, there are different strategies for LOI and considerations that must be addressed. For example, in the context of the acquisition, and should be a businessman selling an attempt to negotiate all of the material terms of the transaction in the letter of intent when he increased the entrepreneur is the strongest, on the other hand, the goal of a businessman buys principal with respect to the letter of intent is just a lock-up seller and prevent of shopping in a deal for a reasonable period of time. Another major concern with regard to the letter of intent is that they can be considered enforceable by a court of law (ie, can be considered a binding agreement) – Despite the explicit language in the letter of intent to the contrary. The lesson here is simple: you should not be executed letter of intent without the advice of competent counsel.

7. Check Your Emotions At The Door

Big Boys a master’s degree in taking their emotions of transactions and being very disciplined. In fact, the Big Boys will generally walk from the deal if they get out of their comfort zone (for example, with respect to the risk profile, price, etc.) – forgetting about how much time and money they have spent. Entrepreneurs, on the other hand (especially those who do not have a lot of experience package), often become emotionally wedded to special treatment and is able to maintain objectivity as well as along as they get in the process. Often, the organizer will fall in love with a certain amount – such as a home buyer for the first time – and that will lead to poor decision-making positions and risky. (“I do not care if it has termites or that there is a problem sink, I love this house” becomes “I do not care if I have to guarantee personally each of the representatives and guarantees without a ceiling on liability, and I love this deal.”) It is important to His understanding of this dynamic project and processed accordingly.

8. Do Not Blink First

There comes a point in time in just about every deal where they dug on both sides in certain locations, and the question becomes which side blink first; For example, in the context of the acquisition, and should be a businessman selling an attempt to negotiate all of the material terms of the transaction in the letter of intent when he increased the entrepreneur is the strongest, on the other hand, the goal of a businessman buys principal with respect to the letter of intent is just a lock-up seller and prevent of shopping in a deal for a reasonable period of time. Another major concern with regard to the letter of intent is that they can be considered enforceable by a court of law (ie, can be considered a binding agreement) – Despite the explicit language in the letter of intent to the contrary. The lesson here is simple: you should not be executed letter of intent without the advice of competent counsel.

9. Watch Out For “Good Cop, Bad Cop” Routine

Big Boys employ all kinds of negotiation and games, and one of their favorite things is the “good cop, bad cop” routine. Big boy, of course, plays a good cop and a smooth, friendly and modest, and makes the entrepreneur feel like all the issues are being taken care important to him. But then the arrival of documents – chock full of bells and whistles and rolling provisions designed to protect big boy and often with significant gaps on the points of agreement. When the big boy wondered to what is happening here, the answer is, of course, is “it’s my lawyer error” (ie “bad cop”). This game will continue at all stages of the negotiation process on behalf of a large Boy charm organizer in the while counsel pound away all important issue.

10. Contracting With An Aggressive Corporate Lawyer To Watch Your Back

A lawyer for the companies in two major law firms in New York, I learned directly on the importance of watching the return of my clients back to me. “Actually, I have worked on deals worth billions of dollars, where, before signing, and emotions are running high (as discussed above), and is reducing the number of low risk Large or pay – aside investment bankers and / or guys work in order to get deals done. my job, and probably more important than anything, is a sober businessman and lay all of the legal risks important – and then push hard to negotiate proper protection. If The deal was filed sours and lawsuits, documents good Drafting become like an insurance policy for the owner of the project – and the businessman does not have insurance?

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