Squeezing Out A Deal
Six months ago, I negotiated a deal to bring on a new product for our company. The product, not new to the industry, showed a great deal of potential but it lacked a solid distribution plan and marketing presence. Fortunately, in the months since getting the agreement in place, things are progressing nicely. This article isn’t about that deal though.
Interestingly enough, it was the owner of the company I came to an agreement with six months ago that introduced me to another potential opportunity. With one email, the ball started rolling on another product that looked to be a good fit for our company. Nearly six months later, I am still trying to pull it all together.
Let me give you a little background on the company I run. We are a small business located in the Midwest. We employee just over twenty people, have sales revenues in the eight figures, and sell a number of different products across three product lines that aim at helping communities. The company has been up and running for 40 years and is growing at an impressive rate. We also sell our products through a vast distribution network that is starting to go from just domestic to more domestic and international. Because of the distribution network alone, we are approached on a regular basis about products that may be a good fit to add to our line.
In this case, the product we are talking about is a great fit for our line. It compliments another product line we are doing well with and it already has a great reputation in the industry. The problem is, the growth potential is limited. The company and product I’m looking to make a deal with has a heavy regional presence, but they haven’t been able to explode on the national scene. That’s where we come in. Now, back to the deal.
We started with a series of phone conversations with key members of both teams. By key members, I mean Presidents, CEOs, and COOs. We ended up doing a little bit of a dance on the roughly six calls to see just how much the other was willing to share before deciding if a Non-Disclosure Agreement (NDA) would be necessary for us to move forward. The NDA was the right call from the beginning IF the deal looked to have potential but prior to knowing if it may be a good fit, getting attorneys involved can, and oftentimes, does lead to spending money unnecessarily. Fortunately, after the series of calls, we determined things looked good enough to move to the next stage.
The next stage was a two-day onsite meeting. The two days ended up being a Thursday and Friday about two months ago. We started the meeting at 9:00am on Thursday and ended at 5:30pm Friday. We brought lunch in both days and didn’t leave my office for anything other than using the restroom. Breaks were just long enough to refill the coffee cup. After those two days, we had narrowed the list of obstacles in the potential deal to five. Those five were massive though! Items on the list included things like acceptable margins, agreeing on locations to store inventory, and a general distribution agreement. We decided there is no time like the present to get things done.
The week after the two-day meeting we jumped right into margins. We both figured if we couldn’t get the numbers to work, there wasn’t much of a point in progressing the other items on the list. Margins are a funny thing. Everybody wants more and nobody is willing to tell you just exactly what they are looking for. When that is the case, things tend to drag on and that is exactly what happened. For the next two months, we had a steady drip of updated numbers, negotiations, revamped models, and different tiered discount scenarios. It wasn’t until yesterday that we aligned on the numbers.
With numbers now agreed, we are working hard to get the agreement in place. Original timelines brought us to the first part of November to have something done. If we couldn’t hit those dates, then the owner of this company with the product that would fit nicely into our mix would need to take the opportunity elsewhere. For that reason, I spent time on Saturday morning this weekend tweaking the agreement text so that I could get an updated version back to the other company Sunday. By me managing to pull that off, we are positioned to be able to sign on Monday of this upcoming week. If that happens, I will be successful in squeezing out a last-minute deal to add an awesome product to our line. What can I say…when you are at the top, feeling the pressure as time is running out on an opportunity is part of the job!
