Getting Big Deals Done, Part II

Last week, I wrote about how successful companies are led by entrepreneurs and executives highly skilled at getting big deals done.

In it I shared 3 factors you must embody to become a great dealmaker [if you missed that post, you can read it here].

Now, great dealmakers get deals done for companies with “dealable” qualities.

Those qualities include financial health, scalability and companies that compete in hot markets.

And when dealmakers are at the helms of companies like these…
…deal-making magic happens.

Let’s start with financial health.

The plain fact is that it is hard – not impossible, just hard and slow – to consistently get deals done without available cash and liquidity.

Of course, there are certain kinds of deals that by their very nature involve “dealing” – i.e. our hustle and promises of to-be-delivered value in exchange for the other side’s cold hard cash.

But even here, except in special circumstances (e.g. startups where cultures of financial discipline and frugality needs to be developed), operating on a shoestring is suboptimal, as the trying need for cash too often tempts us to accept deal terms not in our true strategic interest.

Here, a great (and for most mature small businesses, under-utilized) solution is to “strengthen the balance sheet” through an outside capital raise.

Then, when deal opportunities present themselves – like strategic partnerships, new hires, marketing campaigns, growth-by-acquisitions, etc. – that solid balance sheet enables a more strategic analysis of the opportunity’s value, versus approaching it from a place of financial scarcity.

And with fund-raising, there naturally follows an evaluation of a business’ scalability, its ability to grow revenues at a faster rate than variable costs – marketing, sales, customer fulfillment, etc.

Normally, software and product-based businesses are more scalable than service and retail-based ones, but importantly business scalability is measured on a spectrum versus on a “you-have-it-or-you-don’t” basis.

Facebook is a great recent example. Necessitated by its recent privacy and data breach challenges and snafus, the company announced earlier this month that it is hiring 20,000(!) new employees to police the site’s various bad actors – nefarious foreign governments, hackers, snoopers, et al.

The point here is that even the company with arguably the most scalable business model in history has been forced to descale, which in turn makes it a less attractive deal-making partner than it was in its Instagram-, WhatsApp-, and Occulus-acquiring go-go days.

In contrast, small businesses can re-scale themselves via improving business model components – product offering, marketing, sales channel, fulfillment, etc – that over time have become bloated and uncompetitive.

Finally, because of the inherently higher value placed on companies competing in hot markets – crypto, artificial intelligence, cannabis, e-commerce, mobile –  those companies will naturally be offered more and better deal terms by partners and suitors.

But what of the large majority of businesses that are not in hot markets?

Well, get a deal done so that you are!

Last time I checked there is no rule that says that if a company is in a low growth, low sizzle market now that it has to stay there forever!

Because when we put great dealmakers at the helm of well-capitalized, scalable companies competing in hot markets….

…big deals just happen.

What is better than that?