There’s no way around it, most deals are expensive, even deals on the lower cost end of the spectrum. When you factor in the cost of your time and lost opportunities, it adds up even further. But few things are more expensive than a deal that doesn’t close, and almost nothing is more expensive than a bad deal that does close.
Below are a few tips we’ve found helpful for getting the most out of your deal budget:
- Set Clear Priorities: Getting the most out of your budget is all about putting your dollars to work wherever they are going to create the most value for you. Having a clear understanding of your priorities, and making sure your team understands those priorities, is a great place to start.
- Choose Value Maximization or Cost Minimization: Usually, minimizing costs and maximizing value are at opposite ends of the budget spectrum. Take time before your deal process gets started to decide which approach, or what blend of the two approaches, is the best fit for you. Make sure your team understands how that fits into creating value for you, so that they can set the right scope, approach and budget for your deal.
- Get a Realistic Deal Budget From Your Team: Make sure your team provides you a realistic budget up front. We hate $urpri$e$ and most of our clients do too. In determining whether a budget is realistic, consider the providers level of experience, their understanding of the amount of work involved, and cost drivers such as relationships, complexity, and timeline. Look for detailed thought from the provider. If you see overly rounded hours or dollars without accompanying thought into the work that goes into it, ask for more detail. This is the one area we see clients struggle with the most, is when a provider hasn’t put enough thought into budget, and then the client either ends up with a surprise bill, or has to cut out important pieces of value. You can’t optimize your budget, without good information to start with.
- Close Your Deal On Time: Whenever possible, close on time. Delays can cost buyers tens of thousands of dollars per week in lost revenues and profits, and can add to the risk of killing the deal and losing opportunities for both parties.
- Get Regular Budget Updates: Have your team provide regular budget updates, or at least updates if there is a need for any meaningful change to budget, so that you can continue to optimize how your dollars are spent. Ask for communication that allows you to make proactive budget decisions.
- Over-Communicate With Your Team: Generally, the more information your team has about what is important to you, and the more information they have about the deal, the harder they can put your dollars to work for you. Some clients try to limit communication to manage costs. Get feedback from your team about how that what approach works best for you, and how that can impact your budget.
- Manage Relationships Well: Nothing blows the budget faster than when a relationship gets off track. Make sure to do your part with the seller directly, and engage your attorney to get the relationship back on track if the deal team relationships (e.g. attorney to attorney) are getting off course.
These resources are provided for informational purposes only, and are not legal advice. No attorney-client relationship is formed through this page. Please contact us if you’d like to inquire about our services.