4 to 1
- 4 term sheets are worked on for every deal signed, according to a Syneos survey of deal makers.
- Differences in perception of value is the #1 reason for failure.
So how to minimize the differences in value perception?
Deal Prep: work to understand how partner will see development, risks, competition and differentiation. Have a clear path to potential and risk reduction.
Build confidence: Share new data, offer an MTA, offer experts, lots of communication!
Diligence: easy to miss things in diligence in new area – ask their assumptions, development plans. Give a guided tour of the data room. Get experts together.
Negotiations: Share valuation modeling assumptions, share experts outside the company
Don't fix the price before defining the deal. This can create a value disconnect.