{"id":298,"date":"2018-05-18T18:31:01","date_gmt":"2018-05-18T18:31:01","guid":{"rendered":"http:\/\/www.originatemoredeals.com\/?p=298"},"modified":"2018-05-18T18:40:10","modified_gmt":"2018-05-18T18:40:10","slug":"how-to-gracefully-decline-a-deal","status":"publish","type":"post","link":"https:\/\/www.originatemoredeals.com\/index.php\/2018\/05\/18\/how-to-gracefully-decline-a-deal\/","title":{"rendered":"How to Gracefully Decline a Deal"},"content":{"rendered":"<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" data-attachment-id=\"299\" data-permalink=\"https:\/\/www.originatemoredeals.com\/index.php\/2018\/05\/18\/how-to-gracefully-decline-a-deal\/4a9a5fea1b021798c098e030fdad4802\/\" data-orig-file=\"https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?fit=640%2C492&amp;ssl=1\" data-orig-size=\"640,492\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"4a9a5fea1b021798c098e030fdad4802\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?fit=640%2C492&amp;ssl=1\" class=\"alignleft wp-image-299\" src=\"https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?resize=343%2C264\" alt=\"\" width=\"343\" height=\"264\" srcset=\"https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?resize=300%2C231&amp;ssl=1 300w, https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?w=640&amp;ssl=1 640w\" sizes=\"auto, (max-width: 343px) 100vw, 343px\" \/>The most significant and lasting cultural fingerprint I left on my father is his love of <em>Seinfeld.<\/em>\u00a0 Whenever we\u2019re together, the topic of one favorite episode or another pops up in our conversation.\u00a0 It just happened when we were together recently.<\/p>\n<p>My dad was asking about my job and how things were going.<\/p>\n<p>\u201cLet me get this straight,\u201d he began. \u201cYou guys look at 800 to 1,000 deals a year to only make 15 to 20 investments??\u201d<\/p>\n<p>\u201cYes,\u201d I nodded.<\/p>\n<p>\u201cWow, that\u2019s under a 2% close rate.\u00a0 You must be an expert at not telling people their baby\u2019s ugly!\u00a0 Ha! Do you remember that one Seinfeld episode . . . \u201c<\/p>\n<p>Cue the tape!<\/p>\n<p><span class=\"embed-youtube\" style=\"text-align:center; display: block;\"><iframe loading=\"lazy\" class=\"youtube-player\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/rkadtxlCRU4?version=3&#038;rel=1&#038;showsearch=0&#038;showinfo=1&#038;iv_load_policy=1&#038;fs=1&#038;hl=en-US&#038;autohide=2&#038;wmode=transparent\" allowfullscreen=\"true\" style=\"border:0;\" sandbox=\"allow-scripts allow-same-origin allow-popups allow-presentation allow-popups-to-escape-sandbox\"><\/iframe><\/span><\/p>\n<p>\u201cA little too much chlorine in that gene pool.\u201d\u00a0 The best.<\/p>\n<p>OK \u2013 back to work.<\/p>\n<p>Yes, my dad raises an excellent point.\u00a0 As most Business Development professionals will tell you, one of the most uncomfortable things to do is turn down a deal, especially when it\u2019s with a close relationship or big name private equity sponsor that you\u2019d love to do business with.\u00a0 This problem especially plagued me when I got my start in the business.<\/p>\n<p>I hope to provide some of the best techniques I\u2019ve developed to make sure that when you need to say \u2018no\u2019 the person receiving the decline should want to do business with you again.<\/p>\n<p>First.\u00a0 No Happens.\u00a0 That\u2019s this business.\u00a0 You need to get really good at giving and taking rejection when you\u2019re a private equity professional.\u00a0 This industry is filled with many direct people.\u00a0 At first, I hated it.\u00a0 I was a nice Midwestern kid who didn\u2019t like making others upset.<\/p>\n<p>Second, don\u2019t waste people\u2019s time.\u00a0 I\u2019ve worked with people that will do an hour call with an investment banker just to tell them at minute 57 that this won\u2019t fit our mandate because [ <em>insert reason below<\/em>\u00a0 ]<\/p>\n<p>. . . too little revenue.<\/p>\n<p>. . . check size too small.<\/p>\n<p>. . . we don\u2019t touch the industry.<\/p>\n<p>. . . we don\u2019t invest in that part of the country.<\/p>\n<p>. . . I hate the company\u2019s logo.<\/p>\n<p>. . . I used to date the CEO\u2019s wife. (Well, that one may require a management meeting to confirm.)<\/p>\n<p>See a pattern?\u00a0 Yes, these are facts that 95% of the time should appear in the deal teaser and 100% of the time will be in the Confidential Information Memorandum (CIM).<\/p>\n<p>Meaning that the person reviewing the deal should know within 5 or 10 minutes whether the deal is Dead on Arrival (DOA).\u00a0 I get it, I\u2019m a CIM junky.\u00a0 I love learning about new and interesting companies.\u00a0 That\u2019s what attracted me to this profession.\u00a0 But don\u2019t waste the banker \/ lender \/ buyer\u2018s time just because you want to learn for learnings sake.\u00a0 If a deal is not within your firm\u2019s basic investment mandate, kill it quickly!\u00a0 You\u2019re more likely to see the next deal if you do!<\/p>\n<p>\u201cA fast no is a good no,\u201d meaning that people appreciate a <em>thoughtful and rapid<\/em> decline because that person does not need to circle back and worry that they might be missing people that actually are interested.<\/p>\n<p>Respecting someone else\u2019s time also means never asking for additional materials when the rejection was self-evident from the outset. Take the time to review the teaser thoroughly before requesting an NDA. If something basic isn\u2019t right &#8211; the industry, size, business stage or geographic location &#8211; that should be obvious right away. Establishing an NDA is a time-consuming prospect for everyone involved, and if it\u2019s evident that the deal should be declined after reviewing the teaser, it\u2019s completely unnecessary.<\/p>\n<p>So how do you know which deals you should spend time with?<\/p>\n<p>First and foremost, it\u2019s wise to have a very clear sense of what type of deals you\u2019re looking for. <a href=\"https:\/\/www.entrepreneur.com\/article\/243480\">Define what your ideal opportunity looks like<\/a> and, understanding that most investments won\u2019t meet the criteria exactly, use that \u2018perfect deal\u2019 as a lens to analyze the \u2018interest level\u2019 of new deals. This allows you to act quickly and avoid the protracted world of \u2018maybe.\u2019\u00a0 Focus on bringing in the best deals first.<\/p>\n<p>People not only appreciate speed, they <a href=\"https:\/\/www.quora.com\/What-is-the-best-way-for-an-investor-to-turn-down-an-entrepreneur\">appreciate a definitive answer<\/a>. A quick and absolute no, while disappointing, is nowhere near as dreaded as never-ending uncertainty. Whenever possible, avoid telling someone maybe, and if you must, try to ensure that it\u2019s a short-term answer that can be tipped one way or the other swiftly. Giving people insight on how your view of the deal will be swayed will also help them guide you to the likelihood that \u2018you\u2019re going to get there.\u2019<\/p>\n<p>A business development best practice should include providing an honest explanation for why the deal isn\u2019t a good fit. Never let silence serve as a stand-in for a response, and try to avoid using <a href=\"https:\/\/venturebeat.com\/2012\/05\/28\/25-things-investors-say-when-rejecting-your-startup\/\">vague and meaningless <\/a>language, explanations like: \u201cit\u2019s not a good fit for us at this time.\u201d Entrepreneurs can learn a lot from rejection, so be sure to give them the opportunity to cull actionable data from the exercise that they can leverage to make future pitches stronger. They may need to better research their target investors, address a flawed business model, or make changes to their team. Whatever it is, give them the gift of your feedback and the opportunity to learn from their mistakes. And someone who isn\u2019t enthusiastic about constructive feedback usually isn\u2019t the kind of person you\u2019d want to partner with, now or in the future. Follow the famous adage \u2018give to get.\u2019<\/p>\n<p>I frequently will offer suggestions on other investment firms that may have an interest in the deal. Firms are varied, and as long as the opportunity isn\u2019t fundamentally flawed, there\u2019s likely someone else out there that\u2019s filling that particular capital niche. One firm\u2019s trash can be another\u2019s treasure. Providing suggestions of alternate targets is one of the best ways to decline. Closing one door by opening another creates goodwill and ensures that there are no hard feelings. And wherever possible, <a href=\"https:\/\/www.quora.com\/How-do-VCs-help-startups-they-reject\">offer referrals<\/a>. If the other firm(s) are legitimate suggestions, you may have more than one person thanking you for it later.<\/p>\n<p>And those aren\u2019t the only ways to help companies who seek your financial support. For example, if you pass on investing in a great software company because they\u2019re based overseas and you don\u2019t invest internationally, that doesn\u2019t mean that you can\u2019t recommend the company\u2019s product to your own IT department, your portfolio companies, or other business contacts. There\u2019s no shortage of ways to pivot a rejection into a helpful and positive experience for everyone involved, so try to think of them as the <a href=\"http:\/\/www.citizentekk.com\/venture-capital\/\">first step<\/a> in the formation of a strong new relationship, or the deepening of an existing one.<\/p>\n<p>Let\u2019s wrap this up so I can get back to watching more <em>Seinfeld<\/em>.<\/p>\n<p>Here\u2019s what we learned.\u00a0 A key to successful investment (and perhaps life in general) is turning down opportunities that aren\u2019t the right fit. Every investor is familiar with the scenario: we can only accept a very small percentage of the opportunities that cross our desks, and sometimes that involves passing on solid companies for reasons that can feel arbitrary. Because so much of what we do involves saying no, one of the most important skills to cultivate is the ability to tactfully pass on deals that don\u2019t fit the bill. With practice and effort, it\u2019s possible to deliver rejections in a manner that not only preserves key business relationships, but grooms them to become more fruitful down the line.<\/p>\n<p>Relationships are paramount to our success, meaning all referral sources and business owners must be treated with deference and respect. By being upfront, honest, and considerate, you can ensure that your contacts will continue to send deals your way, that those deals will become better over time, and that business owners who are grooming your next star investment don\u2019t write you off because of the inconsiderate way you treated them or a friend previously. By delivering your rejections with compassionate honesty and useful insights, you\u2019ll be setting up yourself, your firm, and your contacts for greater success.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The most significant and lasting cultural fingerprint I left on my father is his love of Seinfeld.\u00a0 Whenever we\u2019re together, the topic of one favorite episode or another pops up in our conversation.\u00a0 It just happened when we were together recently. My dad was asking about my job and how things were going. \u201cLet me [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-298","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uncategorized","entry"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8gb0U-4O","jetpack-related-posts":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.originatemoredeals.com\/wp-content\/uploads\/2018\/05\/4a9a5fea1b021798c098e030fdad4802.jpg?fit=640%2C492&ssl=1","_links":{"self":[{"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/posts\/298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/comments?post=298"}],"version-history":[{"count":2,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/posts\/298\/revisions"}],"predecessor-version":[{"id":301,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/posts\/298\/revisions\/301"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/media\/299"}],"wp:attachment":[{"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/media?parent=298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/categories?post=298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.originatemoredeals.com\/index.php\/wp-json\/wp\/v2\/tags?post=298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}