Dave Keil’s Post

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Operating Partner, Franworth, Board Member, Operating Advisor. Founder, Franchise For Good.

Lessons on Purpose September series #9: Interests before Options In 90% of the 50+ acquisitions I have led, aligning the parties interests has been the key to success. Often folks believe that negotiations should be positional: you ask 100, I bid 50 and we agree on 75. The most value actually gets created when the parties align on interests, and potential ‘deal killers’ before discussing price. A few examples from deals I have led: - Haagen-Dazs and Ben & Jerry’s, arch enemies with the consumer, found a common interest in Haagen-Dazs taking over distribution - and we split $15M in annual cost savings as a result - In several cases we found win/win deals where instead of one party buying another, we created a JV together and then took share from another company in the same industry - When buying a technology company, we uncovered that the ownership group valued stable employment vs cash value, so traded lower enterprise value (helping the buyer) and delivered employment for the seller - I have terminated more than a dozen deals when we identified, early one, an issue neither party could agree to, well before we got into the expensive legal and due diligence process My suggestion - spend 5X the time aligning on interests prior to negotiating price, or deal structure.

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