Creating a Winning Scorecard

Setting clear and compelling priorities can be an important part of having a great deal process. It can help filter a lot of the noise and the chaos in the deal process and make important decisions clearer.  

Below are a few suggestions that may help you in setting good priorities for your deal.  

How to Approach this Process:  

• Don’t overthink it –there’s no right or wrong answer:  Don’t overthink it, and don’t worry about “getting it right.” There’s no test at the end.  You can update or change your priorities at any time.  

• Make the goals your own: This isn’t anyone else’s deal, it’s yours, and it should create value for you based on what matters most to you.  

• Think about confidentiality: Make sure all steps are taken in compliance with any confidentiality obligations. 

 

Writing Your Goals:  

• Start with why: Start with the underlying reason these goals are important to you. The more compelling the “why” behind your goals, the more meaningful each of them will be.  

• Start with a long list if needed. Sometimes, starting with a long list of all the things you would consider including can be really helpful.  

• Sleep on it. Once you’ve written the big list, “sleep on it” for a few days if needed. That extra time can add a lot of clarity. 

• Get feedback: Get feedback from people you trust- mentors, advisors, your spouse, etc. It’s helpful if it’s someone with experience doing deals, but doesn’t have to be.  

• Be clear: Set clear goals, and avoid being overly broad.  An overbroad goal might look like “get a fair price for the business,” a clearer goal might look like “get a purchase price of at least 3 times EBITDA.” 

• Avoid specificity that doesn’t create value:  If a goal is specific in a way that doesn’t create value, it can destroy value and make decision making more difficult. Ask if the specific addition is the only way to achieve something really important to you. If it is, then include it. If not, think about broader language. 

• Pick only a few key goals. You can pick as many goals as you’d like, after all, it’s your deal!  3 goals can be a good number for many deals. The more goals you have, the more difficult it can be to make key decisions, and the more resources will be consumed in making those decisions.  

 

Updating Your Goals:  

• Make changes deliberately and decisively. Don’t change your priorities in a hurry. Consider getting feedback on a prospective change from your deal team. Be deliberate about making a change, but trust yourself to know when it’s time to make a change, do it decisively and don’t look back.    

• Communicate changes quickly. Let your team know about each change so that they can focus on what matters most to you.   

 

Sample Seller Scorecard 

Deal Name:	Sale of Acme Corp to Local Joes
Date Updated:	X/X/XXXX
Why Statement(s):	Spend more time with family and leave a financial and community legacy for my grand children
Goals/Priorities:	Fulfill post-closing work within 12 months after closing	Get at least $X after tax proceeds.	Ensure all key employees keep their jobs
Success Indicators:	Transition services agreement has limited term and clear scope of duties	Favorable input from tax advisors  Favorable purchase price allocation  Clear purchase price in LOI	Retention agreements for each key employee  LOI and contractual obligation  Relational connection with buyer and key employees
Failure Indicators:	Open-ended work obligations		No retention agreements   No retention bonuses

 

Sample Buyer Scorecard 

Deal Name:	Purchase of Assets from Acme Corp
Date Updated:	X/X/XXXX
Why Statement(s):	Buy and build a business that changes our family story, and has a positive community impact
Goals/Priorities:	Negotiate a price of no more than $X	Successfully retain customer relationships	Retain the key employees/management Team
Success Indicators:	Price agreed to in LOI   Asset purchase structure   Appropriate working capital target	Contractual obligations for seller post-closing meetings with key customers  Consents to contract assignment from X largest customers   Price adjustment or escrow for part of the purchase price for at risk contracts	Retention agreements signed by all key employees
Failure Indicators:	Price not agreed to  Asset purchase structure not agreed to  Net working capital not agreed to	Less than X key customers consent to assignment	Less than X key employees sign retention agreements

 

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