Firehouse Blog

Monthly Archive: December 2012

Let’s Make a Deal

terryblogI could write a book on this, but I am sure it’s already been written.

My interest turned to the events surrounding the breakup and reformation of several college sports leagues recently. Over and over I read the ramblings of sports writers and fans as they continue to chatter and wring their hands at each tidbit of news about the realignment of their favorite college basketball team. What struck me was that no one I was reading had any understanding of how deals LetsMakeADealcome together and close – or end. Here is a brief overview of deals. It doesn’t matter if the deal is the purchase of a piece of equipment, a house, a business or the commitment to move your college athletic association to another conference. Deal mechanics are the same. Here they are.

First, everything is negotiable.

You may read that such and such is a barrier to getting a deal done, and you may worry that this obstacle is a deal killer, only to read later that when the deal closed the problem was surmounted. This is because when really good advisors are used in deal making, they know how to negotiate even the stickiest of problems.

Second, price is important, but terms drive the deal.

When you read a contract and you see half a page that outlines the deal and 19 pages of fine print you will learn that the terms drive the deal. Don’t believe that the price or cost information you hear is the final deal. Terms drive deals to conclusion. The seller never provides full disclosure. Ever! Sellers never fully disclose motive or problems. This is why buyers must do and pay for ‘due diligence.’ What you read in the papers about this team joining this conference for this reason is never the entire story. Pronouncements and denials are part of the narrative of creating and closing deals. The truth of a deal is hopefully fleshed out in private ‘due diligence’, not in public declarations.

Finally, deals are never done until the check clears the bank.

Don’t get excited until someone writes a check that ends up deposited in someone else’s account. Deals get started for the promise of gain, but they often close only with the fear of loss. The scales that measure cost and value dip back and forth in deal negotiations, but the biggest swings occur near the end of deal closure as one or both sides feel the fear of losing a good deal.

Here is the lesson, the take away, when doing a deal that is bigger than buying a car:

– Always use an advisor or intermediary to negotiate for you
– Pay for the ‘due diligence’
– Always be emotionally able to walk away from the deal if the price and/or the terms are less than acceptable.

Don’t do a bad deal, don’t do a “not sure” deal. Only do good deals. Don’t listen to what is said about deals in the news. That’s only part of the story.

 

Terry Corman
Firehouse CEO

The Ingredients of Success

terryblogPick up a business magazine, or a book, and you can find endless articles on leadership, management, business plan execution and numerous variations on these themes. But let’s quickly look at the areas that really need executive attention. There are four areas that I will review:

Talent          Mission          Coaching          Culture

 

TheIngredientsOfSuccessTalent
The talent you need for your business success depends entirely on your goals. Here’s my point. Want to achieve a goal such as playing professional golf? Talent comes first. All the coaching and practice will not get anyone to that goal without the talent. Number one golfer in the world right now is 23-year-old Rory McIlroy. Ask yourself, how much has practice helped his game? I’m sure he had great coaching. We know his mission is to be number 1, and the professional golf culture is well established. This enterprise is talent driven.

Mission
Success in the digital printing world isn’t deeply shaped by mission, but that doesn’t mean that in the right enterprise mission is not the most important factor. Look, for example, at Habitat for Humanity. Habitat builds homes, yet because of its mission, it receives free labor and materials. Quite a business model, right? Well, it’s mission driven. The talent and coaching is often amateur, but success is driven almost entirely by mission.

Coaching
I use the term coaching as a sweeping term to sum up both leadership and management. Read about them in the thousands of books written on this subject, but know in some businesses they are the most important factor, just as we have seen that talent and mission can be the most important factor in success. My favorite sports coach has a unique record, in that when given 6 days to prepare for a game, his record is 26 wins and 2 losses. The 2 losses were NCAA national championship games. This coach is a great leader, and given time, can come up with great game plans. In many enterprises the critical factor is coaching.

Culture
But as a business leader, I believe that the most important factor for success is culture. It is also the least understood or developed for business success.

Talented people can be hired, and then leave. But in a great culture they stay.

Business models (Mission) can change and business plans can be altered, but in a great culture everyone pulls together to get through the change and the challenges.

Leadership and management (Coaching) can be weak in areas, or ebb and flow, but in great cultures coaches at every level improve with years of additional experience.

Some endeavors demand talent first and foremost. Others must put mission first. Some demand great coaching. But in the crucible of a great culture, outstanding results and talented people will develop over time and that brings the most value to the endeavor.

How do you create a great culture? Stay tuned for a future message on culture building.

 

Terry Corman
Firehouse CEO