Deal Making Process Improvement Guidelines

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Know Manage Lead 22 June 2007 Noric Dilanchian | noricd@dilanchian.com.au Managing Partner, Dilanchian Lawyers & Consultants Deal Making Process Improvement Guidelines

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DEAL MAKING WORK FLOW

INTRODUCTION TO SEVEN STEPS: 

What’s in these best practice guidelines? Seven practical steps, ie rules or principles What core process and competency is needed to apply the seven steps? Plan > Manage > Deal What are three ways of recording a deal? Contract Understanding Arrangement INTRODUCTION TO SEVEN STEPS

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Drivers of change are both challenges and opportunities for deal makers Digitisation Innovation Globalisation Specialisation Commoditisation Increased rates of change Fractionalisation of markets Services-oriented Higher standards New organisational structures Online social networking

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Contracts are common for recording deals. Contract-intensive deals include outsourcing, procurement and tendering. Other examples: Contract Law – Seven Essentials 1. Intention 2. Offer 3. Acceptance 4. Terms 5. Consideration 6. Capacity 7. No other ground for legal invalidity

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Use or follow these in deal making - Trust - Consultancy - Ethics - Communication - Process - Proper variations Eliminate ambiguity in communications and arrangements Adopt and communicate statements of values and codes of conduct STEP 1. FOLLOW COMMONSENSE

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STEP 2. MAKE AND KEEP RECORDS Document Management Make Records Control Records Store Records Turning records into communication Key turning points on issues or in negotiations can be documented with messages Emails… (oops!). To give more work to lawyers, send lots of emails and always treat them like you might a telephone conversation. ;)

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STEP 3. WORK WITH EXPERIENCED PEOPLE Your internal team Need to set the standards, recruit appropriately, train your personnel, mentor them and constantly monitor performance. Your external team Use your external team if they provide value for money, introduce a higher level of required technical expertise or better, faster or cheaper results due to: Issues clarification and analysis Problem and cost reduction or avoidance Information Processes Risk management Objectivity

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STEP 4. SELECT THE RIGHT PROCESS Options Understanding Arrangement Contract Details Legal precision – seek “meeting of minds” Match the job to the right process Time shifts and next levels into negotiations Contracts are not essential for deals Avoiding contracts – use “subject to contract”

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Strategy & Tactics 1. Test assumptions 2. Issues 3. Positioning 4. Objectives 5. Options and scenarios 6. Negotiation style and tactics STEP 5. NEGOTIATE THE DEAL

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Why is contract drafting difficult? Reasons in legal history Changes impact classic contract doctrines Doctrinal disintegration of classic doctrines Contemporary demands and conditions Sing this mantra “A good contract is custom-built in content and design for specific circumstances.” STEP 6. AGREE & DOCUMENT THE DEAL

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Performance challenge Service level agreements are everywhere Quality performance control Costs basis determination Project management Risk management Quality management STEP 7. USE QUALITY PERFORMANCE CONTROL

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Seven deal making best practice rules: Step 1: Follow commonsense Step 2: Make and keep records Step 3: Work with experienced people Step 4: Select the right process Step 5: Negotiate the deal Step 6: Agree and document the deal Step 7: Use quality performance control processes SUMMARY

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Dilanchian is a law firm of specialist lawyers and consultants with over 20 years experience in business law, emphasising technology and intellectual property management and commercialisation Important Disclaimer This document is an overview for general guidance only. It does not replace the need for advice on individual cases. For specific advice your particular circumstances must be taken into account. / Copyright © Dilanchian 2007 / Liability limited under a scheme approved under Professional Standards Legislation QUESTIONS? Email: noricd@dilanchian.com.au