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Patience as a Virtue in Deal Making

“Patience is a virtue” is easier said than done, especially when parties are embroiled in the tense negotiations that often accompany business deals, and especially when self-imposed deadlines are nipping at their heels. But deals rarely benefit when a deadline takes precedence over the deal itself. In fact, far more often than not, pausing to reflect enables good things to happen and prevents unforeseen negative consequences from occurring.

Certainly, the need for speed and sustained forward progress makes sense in any business deal, but I have yet to encounter a deal that has suffered from taking the time to re-evaluate based on new information or insight.

Patience cartoon

Often, the original thesis (the reason the deal makes sense for both parties) is verified and the deal moves forward, perhaps with some adjustment to a post-closing operational matter or an allocation of risk. In some cases, the new information changes the landscape to the point at which the deal no longer makes sense without some significant change in the transaction itself. Being able to create some time in the deal to digest and understand the change and to put the change into context is invaluable and often prevents future regret, resentment, and conflict.

Case in Point

I recently had a week where the operational diligence, lending diligence, title/survey objections, and environmental reports all came back at the same time on a particular transaction. The client and I were reeling from the influx of information, to the point where we were not able to engage in thoughtful review and make decisions. It was not that we were simply avoiding bad decisions; we weren’t making any decisions. That was almost worse in the eyes of the seller, who perceived the inaction as a sign that something was wrong or that we (the buyer) no longer wanted to proceed. From the seller’s standpoint, any action or decision, even a bad one, would have been better than inaction.

By Thursday of that week, the client and I were able to connect for a focused and systematic review. We were able to take a couple hours and walk through the recent developments, new information, and the state of relationships with the seller, lender, and other investors. Once we actually looked at all the moving pieces and information, we found that the reality of the situation was better in some areas and required more attention in others. Ultimately we were able to work through even the rough patches.

Issues, ignored and unresolved, can get lost in the snowball effect of deal dynamics. If that happens, once the deal is done, the party that received the new information or had a change in view can be left with a deal that should not have been done or, at best, a project that is more difficult or expensive than it needed to be. A pause or two during the deal can be just what is needed to secure a better deal with less future resentment for both parties.

Creating a Productive Pause

Deal participants often are anxious or afraid to bring up issues or concerns because they do not want to be seen as “wafflers” or “deal killers.” Their desire to feel and appear decisive eclipses their ability to recognize the fact that assertiveness and clear communication often drive a deal that is better for both parties in the long run.

I have found that a direct approach is usually best, and it typically works best if a third party initiates the pause, which is where I often take the lead. This will obviously depend on which party I am approaching, but most times, regardless of the party, if the relationship is governed by goodwill and I am direct, the conversation goes well. If it is my client or someone else who is working with my client, I can often be very direct and state that the group needs to take a deep breath and look at the issue or issues that seem to be spinning out of control.

While speed and efficiency are certainly a virtue in deal structuring and process, I believe that the wise and thoughtful deal maker incorporates patience and measured variance at different times during a deal. The issue for almost all of us is to be able to step outside of the deal at times, take in the dynamics as a whole, and if possible, try and influence the pace to allow for all actors to exercise patience. A wise balance of action and inaction can do wonders to close a deal in a way that significantly improves the deal’s future outcome for everyone involved.

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Disclaimer: The information in this blog post is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Stephen Dietrich, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
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About The Author: Stephen Dietrich is an attorney and author who has a passionate interest in the human side of business. His distinctive combination of legal and business knowledge, human insight, and dedication to clients makes him uniquely qualified to help corporate leaders and other C-level executives navigate high-value mergers and acquisitions, restructure transactions, and manage day-to-day operations. Through this blog, Stephen shares his extensive experience and unique personal and professional insights in the hope of stirring thought and dialogue that leads to ever deepening insights and understanding. For more information, please visit www.StephenDietrich.com.

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