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One key to getting great deals done ... together.
Dear Remora - I’m so frustrated. I’ve spent the last eight months negotiating a massive licensing partnership deal. I’m convinced this deal could transform our company. But it's not perfect. And we have no clear process for resolving issues with the deal. Our CMO is concerned about one issue. Our CPO disagrees with our CRO on another issue. Our Legal team wants buy-in from our CEO on another issue.
How do I bring these stakeholders together and get this deal signed?
Dear Stuck-at-the-goal-line - I’m guessing you’ve never seen a bumper sticker that reads:
“Behind every great organization is a great decision-making process.”
It's not sexy. But it’s the truth.
A well-defined and open decision-making process is how great companies turn a talented people with ideas into commitments to collaborate towards a common goal.
You may be familiar with a product review, which great companies use to develop great products. Well, a deal review is how great companies drive the kind of alignment that is needed to pull-off great partnership deals.
I strongly suggest you organize a deal review using the guidelines below.
What is a deal review? Why is it valuable?
A deal review is a forum that assembles the key internal stakeholders whose input and commitment is needed to make a partnership successful if/when an agreement is signed.
The purpose of the deal review is to evaluate the risks and benefits of a partnership agreement collectively before the deal is finalized, so that there is clear alignment on if/how to proceed with the deal.
7 qualities of an effective deal review
A well-run deal review is a bit like a love child between a court hearing and a dissertation defense. A deal review should be …
Pre-emptive - the discussion anticipates how a deal could go wrong and is scheduled with enough time to make adjustments to the deal.
Efficient - everyone comes to the deal review with a common understanding of the deal and a perspective on its risks, thanks to a thorough deal summary circulated in advance.
Inclusive - each functional team that will be impacted by the deal is invited to join the deal review and expected to participate.
Transparent - clearly-defined roles and expectations of those participating. Team members that do not participate can get access to notes outlining the discussion, decisions and next steps.
Clearly-documented - a note-taker who captures and circulates key points discussed along with action items and owners.
Candid - an open and direct debate followed by a commitment to the decision made by the decision-maker.
Rigorous - participants need to be direct with each other about concerns with financial assumptions, legal risk, etc. so these can be addressed before a deal is signed.
Your checklist for a successful deal review:
1. Deal owner
The deal owner is responsible for providing participants with a thorough summary of the deal (including financial model) and collecting written feedback from key stakeholders in advance. The deal review is the deal owner’s chance to secure alignment and earn support for their deal. They are also on the hot seat during the discussion.
2. Clear decision-maker
The decision-maker should be designated by the CEO. If there is not a clear decision-maker with authority from the very top, then there isn’t much point in having a deal review.
3. Active cross-functional participation
Giving cross-functional stakeholders visibility into and a voice in partnership agreements is a huge part of deal review. This demands that they participate (or send a representative). Active participation from Product, Legal, Marketing, etc. relies on each function believing that their views will be heard and considered by the decision-maker. This requires a leader who actually listens and earns the trust of functional leads (and the CEO).
4. Thorough deal summary
The deal summary should address the opportunity/upside, risks and mitigation of the deal, financials and success metrics. Here is a deal summary template you can use.
5. Written cross-functional feedback provided beforehand
A good deal summary is not enough because it only represents the view of the deal owner. Cross-functional stakeholders need to provide input in the deal summary so that all participants can get a 360 degree understanding of the deal in advance. This makes for a far more productive discussion.
6. Defined timelines
A regular schedule (e.g. twice monthly) for the deal review ensures that participants can prioritize attending the meeting and set aside time to review the deal summary in advance. A defined timeline also means the deal owner understands when their deal summary must be completed and circulated so attendees can review the deal in advance.
7. Diligent note-taker
There must be a written record of the issues discussed and what actions are agreed to during the deal review that are circulated afterwards. This written record ensures follow-up and alignment across teams. Written records are also valuable if mis-alignment emerge after sign the deal. The note-taker should also raise outstanding items from previously held deal reviews to ensure follow-through.
When is right for a deal review?
Not every deal requires a deal review. They are best used for non-standard deals that require cross-functional alignment to succeed.
Also, deal owners should encouraged to bring a deal to the deal review forum early in the negotiating cycle. Waiting until the final stages of a negotiation can make it difficult to get partner buy-in on adjustments to the deal.