Everything in life has rules. How you negotiate pay, buying a company, getting equity, or just a new job.
If you don’t spend time understanding the frame of deals, you’ll get taken to the bank just about every time.
Don't get taken to the bank⬇️
If you don’t spend time understanding the frame of deals, you’ll get taken to the bank just about every time.
Don't get taken to the bank⬇️
#1 Every Deal Is About 1 of 2 Things
Money or power.
Every deal.
People will disagree with me here. They’re wrong. So figure out what is important to the other side and you’re already ahead.
Money or power.
Every deal.
People will disagree with me here. They’re wrong. So figure out what is important to the other side and you’re already ahead.
#2 Every deal has two aspects: Price & Terms
The saying for dealmakers:
"You can have your price and my terms, or my price and your terms... but you can't have both. "
Secret: Control the terms, you control the price
The saying for dealmakers:
"You can have your price and my terms, or my price and your terms... but you can't have both. "
Secret: Control the terms, you control the price
#3 If You Don’t Know the Terms You Won’t Control the Deal
Ever tried negotiating with someone when you don't speak their language fluently? Brutal.
That's exactly what you are doing if you don’t speak deal terms.
Ever tried negotiating with someone when you don't speak their language fluently? Brutal.
That's exactly what you are doing if you don’t speak deal terms.
Get familiar with the lingo
Some terms to know: Equity kicker, full ratchet, warrants, put option, ROFR, sidecars, first lien position, personal guarantee, stock pledges, yield maintenance etc.
Read @jwdonald1's book (Lifestyle Investor), fast read and covers these
Some terms to know: Equity kicker, full ratchet, warrants, put option, ROFR, sidecars, first lien position, personal guarantee, stock pledges, yield maintenance etc.
Read @jwdonald1's book (Lifestyle Investor), fast read and covers these
#4 Cash Isn’t King, Cashflow Is…
I optimize for making $ on my deals day 1 (personally, not VC)
On every deal ask yourself; can I get money now AND an opportunity for upside later.
I optimize for making $ on my deals day 1 (personally, not VC)
On every deal ask yourself; can I get money now AND an opportunity for upside later.
What am I missing? What are your deal-making frameworks?
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