Ben Smith, IV the Co-Founder of MerchantCircle.com as well as Spoke.com (btsiv.com) discusses the ups and downs of the deal cycle including the highs and lows of the process and when it may be necessary to leave the deal on the table.
- Deal cycle: phases a seller & buyer go through during negotiations
- Be ready to experience the highs & lows of the process
- You may need to leave the deal on the table
I’ve been following a couple of companies. One of the things I can – we all here is of course the whole startup process is a roller coaster. Every day, God things are happening and bad things are happening. Sometimes things are going your way and it is a complete roller coaster. That roller coaster is a pretty modest roller coaster compared to the roller coaster of the deal cycle.
The deal cycle has tremendous ups and downs that could, you know – good days could mean great wealth for you and secure your family’s future and bad days could mean, “Hey, my company may go out of business.”
You got to be prepared for those ups and downs. One of the most important parts of dealing with the ups and downs of the deal cycle is being prepared to walk away. People have lots of terms for this -- your best alternative to negotiate agreement. There are lots of different terms out there but in the end, you got to be prepared for what if you don’t get the deal done. It means your business is still going to be running well and you got to protect the rest of your team from the ups and downs of the deal cycle. It means you have to have other options. It means you have to have your investors behind you if you don’t sell.
I’ve seen a lot of companies fall apart over going almost to a deal then not doing the deal and then the energy comes out of the investors. It comes out of the team and then team begins to split up.
So you got to be prepared for those ups and downs of the deal cycle where you’re potentially putting your company at risk by even entering the deal cycle.