January 21, 2020

M&A Negotiation: “Let’s Get Everybody in a Room. . . “

If you’ve spent any time at all doing deals, you’ve had the experience where somebody on the deal team insists that all that’s needed to get a deal done is to “get everybody in a room and hammer things out.”  Sometimes, that’s the right call – but many times, it just isn’t.  This Andrew Abramowitz blog does a really nice job of laying out why this isn’t usually a good idea.  Here’s an excerpt:

A deal can only actually get done at such a meeting if there are a discrete number of well-defined issues that require negotiation and give-and-take. Often, however, these meetings are called before the transaction gets to that point, when there are a number of open issues requiring the involvement of third parties.

For example, a landlord may need to consent to a particular action being taken in the deal, so the tenant needs to address that with the landlord. Or some specialist, like a tax attorney or accountant, needs to review and sign-off on a particular structure. If you call your meeting with the agenda of not leaving before you’re finished, and you end the meeting with a list of open items even though the meeting was productive, the parties may be resentful that they were asked to block out the time.

Most of the time, you can move the deal along more effectively simply by diligently working with the other side and its advisors to resolve the open issues – while keeping your principals’ powder dry until you really need to call them together.

John Jenkins