No, not that kind of room. This blog is intended to be interesting. But not that interesting.
In my experience, the best way to get a challenging transaction signed is to gather all of the key decision makers on both sides in a conference room, laptops and blue pens in hand, but away from either party’s offices. This group’s sole task is to close out all of the hard issues and actually sign the contract. Both parties need to commit to this course of action in advance, allocating enough time to work through every open item.
There are several reasons that this approach tends to work.
First, “getting a room” forces prioritization. If your organization is typical, you’re trying to do many things well. Everything is a high priority. Inevitably, this results in the more complex transaction not getting the consistent attention it needs to close. The stops and starts are inefficient and often cause the deal to get bogged down unnecessarily. Getting everyone together for as long as it takes ensures that the transaction gets the focus it deserves.
Second, using the conference room approach smokes out misalignment quickly, even within a negotiating team. On each side of the negotiation there will be a divergence of skills. This leads to divergence of opinion and behavior. The lawyers will seem ready and willing to fight over minutiae and trade detailed redlines for months. Meanwhile, one company’s CEO and VP of Sales may not have the same vision for a particular transaction. It may not be clear who owns what issue, even on the same side of the table. Sub-teams may have been created that drill into certain issues in a vacuum. Getting everyone together encourages alignment by requiring each side to react and make decisions promptly in a coordinated manner. Venture capitalist Mark Suster has written on a similar notion, which he calls “cutting out the middle man.”
Third, this method encourages compromise, which is probably the single most significant requirement for the agreement to get signed and for the long term business relationship to succeed. By committing to signature ahead of time, posturing becomes more difficult. Teams are under pressure to compromise because leaving the conference sessions without signature will be considered a failure. Usually, being face to face makes the discussion more cordial and friendly. Developing that spirit of cooperation is much easier as you share meals and spend more time together.
Finally, gathering the key folks together in one place instantly cuts through bureaucratic systems that would otherwise cause tremendous delay. Every company has systems and public companies will typically have strong internal controls. Even when those responsible for these systems are communicative and aligned, getting through the line takes time. Companies willing to close transactions in a conference room also have systems in place to streamline red tape when senior management requires it. Whether that means sending a representative from the purchasing department or a revenue recognition specialist to the meeting, making clear to everyone that a contract is about to be signed can suddenly end the series of waiting games.
Try or revisit the all hands conference room approach. In most situations, it will quickly pay meaningful dividends.