Common Ground

Read any high-level advice about dealmaking, and you’ll likely encounter the conventional wisdom: if you want to speed up the deal, keep it simple.

The dealmaker’s reality is that deals are more prone to complexity than simplicity. They tend to take on a life of their own as they progress from due diligence through negotiation and acquisition agreement completion. Add the complications of the human interactions between and among multi-party deal teams and you have the core ingredients for a protracted transaction.

Joseph Chang’s recent commentary on dealmaking in ICIS Chemical Business (April 20-26) cited a chemical industry CEO whose company has transacted 22 acquisitions in nine years. His observations support the theory that when a deal closes quickly, it’s agility and readiness that fuel deal speed – especially when it’s buy-side agility. The same goes for simplicity.

Chang’s commentary has made the Transaction Commons team reflect on the impact of the buy side and sell-side on deal speed. It’s a seemingly small detail. But every dealmaker’s experienced it. Early on in the deal, the sell-side seems to have the strongest sense of urgency. When the deal moves closer to signing of the agreement, the urgency often transitions to the buy-side (that has now made substantial internal commitments as to its completion.

Chang’s article suggests that when the buy-side maintains a sense of urgency and agility from the onset of the deal, combined with effective processes and tools, the deal gets done more quickly.

It may not be rocket science. But it’s fuel for thought.