WHY TRAVELLING TO NEGOTIATE A DEAL MATTERS

CREATING TARGETS OF OPPORTUNITY:

WHY TRAVELLING TO NEGOTIATE A DEAL MATTERS

I have always valued face to face meetings over all other connection alternatives that the current and evolving communication technologies provide.

A very recent experience proved once again, how actually taking the time (and pay the travel costs) to meet a potential licensee at their home turf can accelerate or in fact salvage a potential deal that was stalling.

We have been engaged with a potential licensee with its base of operations in faraway lands. The initial contact had been made a little over year ago through emails. It was evident from the get go that contemplated deal was interesting to both sides and both parties were forthcoming in stating their interest in taking the matter forward.

Initial contacts and subsequent fact finding / due diligence stages took full advantages of common communication tools such as emails, skype calls, document sharing platforms. However, despite the fact  that both parties were quite sophisticated and clearly serious about communicating with each other, there were sometimes considerable time gaps in responding to inquiries and requests for further details. We started to lose the initial momentum and as matters started to lag, there was a very real risk that one party or the other may, most likely inadvertently, drop the ball.

As far as I can tell, there were three main reasons why the negotiations started to slow down. 1) The overall value of the potential deal was, while welcome and promising for both parties, was not substantial or critical; 2) For the deal to generate value, there were some contingencies to be addressed as the technology was relatively early-stage and incremental; 3) The parties had never met face to face before, this matter compounded by the fact that parties resided far apart with a substantial time difference that made scheduling conference calls difficult.

As negotiations started the drag on, the opportunity cost of the possible deal started to rise.

Two things happened, by chance to vitalize the deal. One of the parties’ agents travelled to Turkey for an independent reason but took advantage of the trip to visit us. Thus, they were able  to visit our premises and meeting people involved in the deal, including the inventor. Almost in parallel, I was invited to speak at a Conference at a country that was near to where our potential licensee was located. So I decided to leave a couple of days early, and spend some more money out of my travel budget to go and visit our potential partner.

The face to face meeting took about two hours. Very quickly, we were able to iron out all of the small details, agree upon the general terms of the collaboration, identify very specific action items and setup a couple of milestones as well as a deadline to execute a finalized contract. Thus, the deal is very much alive and a successful final closing very likely.  Obviously, before the contract is executed, the deal may still disintegrate if one or both of the parties fail to meet a milestone or a dead line. It was also within the realm of possibilities that parties, once in a face to face meeting, realized that areas of mutual benefit and synergy were in fact not present. Such an outcome, while certainly disappointing for us, would have still been beneficial as it is also important to be able to kill deal negotiations as early as possible so that neither party wastes any more time or resources.

In short, taking time (and consequently paying for travel costs, which can sometimes be substantial) to go visit your potential strategic partner is worth the effort. If nothing else, it shows your partner that you take the deal seriously and are committed to see if through. It also establishes an initial element of trust, especially important for parties who don’t have prior experience with each other. Talking over things and addressing potential questions or concerns immediately creates a platform from which you start working together. You are also able to see other party’s body language. Body language and ability to read and interpret it is important.

At the end of the day, the time and money investment that long distance travel entails, even with relatively small deals, both parties end up winners once the deal is made or abandoned for lack of mutual benefit. Thus, one should see the travel costs of doing business internationally, not just as mere costs of doing business, but  a cost of doing business well.