“Let’s talk about taxi rides.” That’s how Peter Homberg, a partner at the law firm Dentons broke the ice among the panelists who gathered for a session entitled, “Dealmaking: Structures and stories.”
What he was seeking, he told the standing-room-only audience, was less talk about the structure of deals that these veterans of business development had made, and more about what he called “war stories,” to tease out anecdotes of personal experiences where soft factors played a more critical role in influencing the final deal than the hard financial and legal terms of negotiations.
Peter Homberg, Dentons
To get the ball rolling, Homberg shared his own experience of sharing a taxi ride at the end of a conference that began a conversation that initiated a negotiation and ended up in a deal. In another example, he said that at a critical moment negotiations stalled and relations between the potential partners turned cold. Coming back from a break in the marathon session, he returned with an oversized Bugs Bunny doll that he placed at the conference table in the seat reserved for the chairman. The ice was broken and negotiations warmed up again.
Peter Dudek from Wellington Partners revealed that in a recent competition for a prized asset, a pint at the pub turned the trick. He said discussions dragged on for months among different companies vying for the deal. One evening a CEO simply picked up the phone, made an unsolicited call to the CEO for the target company and invited him to have a beer.
“They had several, I was told,” said Dudek, who added the two executives jotted deal terms on the back of a bar napkin and “four weeks later we had signatures on paper.”
Jeanette Evans, Executive Director for Business Development and Licensing at MSD [Merck Sharp & Dohme Corp] defined the key human factor in the face of what she called aggressive lawyers and hard-nosed business development people as being an ability to communicate.
“Everyone quite rightly wants to see term sheets, and there are several ways you can approach due diligence. Yet the bottom line is that there clearly needs to be an openness. Compatibility, the credibility of a team and its ability to communicate to others are the soft skills that become critical. There is always going to be a sticking point in negotiations, your ability to speak with your counterpart, to trust your counterpart means you will be able to work through the issue together.”
Don O’Sullivan, Global Head for Immunology and Infectious Diseases at Genentech Partnering agreed, saying, “Trust becomes the most important.”
Don O’Sullivan, Genentech
“We spend a lot of time with data and term sheets in getting deals done,” he said. “Just lobbing a term sheet over the wall and asking for a signature is arrogant. Before putting a pen to paper, there needs to be a discussion about the potentials for value creation. And the potential weaknesses, the warts in a program. Telling us about those warts can help build the trust.”
Peter Buckel with Munich-based Life Science Management Consulting could not resist playing on words when he said, “There has to be chemistry between partners.”
He clarified his meaning by saying that there must first be an understanding about the science, and acceptance of what the partners expect to accomplish.
Then he returned to the other meaning connected to human factors by revealing an unusual and rougher rough stage in the due diligence process he used as the former Global Head of R&D for Boehringer.
“We were close to the Bavarian Alps and we would always take our potential partners on mountain hikes, trekking and even climbing a bit. I think we were the top company in testing the fitness of our partners,” he said, adding that “this helped a lot in creating the relationship.”
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