In my career of closing over 60 mergers and acquisitions and another 11 IPO’s, it has been my consistent experience that everyone thinks they are closer to closing a deal sooner than, in fact, they are. There is a universal denial of how long it takes to put together all the details of a successful transaction, as we always seem to underestimate the complexities of achieving traction and coordination. And the most complicated moving parts are usually human. Yet I have closed 100% of all transactions that reached a signed letter of intent.
In my 38 years of closing experience, the quickest time to closure was 90 days from start to finish. The main cause of the quickness was that I delegated the responsibility to an associate who was an avid golfer, because I knew that the three principals in the transaction on the other side were all avid golfers.
The deal was set in Bristol, TN, in essentially God’s country – a beautiful area of the world and a beautiful place to play golf. So I sent this associate to Eastern Tennessee and he was able to put the deal together in record time. How? Mainly by golfing all day with the parties on the other side. The legal documents became somewhat irrelevant as the parties looked forward to working together after closing.
After they became friends on the golf course and learned to trust one other, according to the sacred rules of the Game, the details of the legal contract seemed rather trivial and minor by comparison. Therefore, they were able to agree on all the terms of the contract, reading them over a beer after finishing a round of golf. In truth the deal could have been done in a couple of weeks, but they needed more time on the golf course.
My Three Rules of Closing:
- Never make it look like you’re there to close. You’re there to develop trust and start a meaningful long-term business relationship. Only after that will you have the chance to close the deal at hand.
- Avoid threatening deadlines. Cultivate the relationship first and act indifferent as to when the closing will occur. Closing deals is a lot like dating, where nuance in communication and behavior matters most. Only one time did I have to say “drop your pencil!” in a large deal where one of the lawyers continued to edit the deal over and over.
- Get to know one other. Find out where they love to eat, find out what they like to do after work; take them to the right clubs and the right restaurants. So that all parties will begin to look forward to life after closing.