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8.8 Action Items
In this Step you learned the importance of preparing for negotiations rather
than winging it. You looked at the key issues under negotiation and examined
how they are presented in a term sheet. You considered some of the factors
that influence price and how to handle the presentation of price during the
negotiation. You covered the role of the shareholder agreement and explored
how a typical negotiation unfolds.
The following checklist will help you to:
- assess your understanding of the ideas covered in this Step;
- gauge your progress; and
- plan your company's approach.
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Put in the time to prepare.
- Investigate the other party.
- Know your own position thoroughly.
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Use an advisor to increase objectivity, facilitate communication
and bring you negotiating expertise.
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Determine your bottom line on all key elements of an agreement:
- price;
- amount of capital invested;
- control (including management responsibilities and board of directors);
- performance measures;
- exit strategy; and
- other.
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Consider what the investor will likely accept on these key elements.
Look ahead for common ground.
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Develop a strategy for handling negotiation over price (consider
the investor's background and how you present your price).
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Prepare yourself and your team for negotiation sessions by reviewing
guidelines on what to do and what to avoid during negotiations.
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With legal assistance, pay careful attention to the shareholder
agreement that will define many of the key elements you've negotiated.
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