10 Tips for Start-Ups Ready to Play with the “Big Boys’ – Part 1

When you are a start-up company and you enter into negotiations with large, experienced companies, it can be intimidating. Below are five tips for entrepreneurs to consider during this process:

1. Due Diligence . Conducting thorough due diligence during any deal is crucial. One form of diligence that is commonly overlooked is the investigation of the individuals you are negotiating with. What is their reputation? Can you trust them? Will they make a good partner? These are questions you should have answered, which means getting references and talking with other entrepreneurs who have done business with them.
2. Be competitive . Whether there is actually a competitive environment or simply the perception of one, it will give you leverage when dealing with a larger company. It is our nature to want something even more when we learn that somebody else wants the same thing! Use this to your advantage and play the competitors off of each other so you can obtain the best deal possible. Just remember, you must use this strategy very carefully.
3. Build a strong team . When you first start out, it is particularly important to have a strong team surrounding you. In other words, you need an experienced corporate attorney to assist you and possible an investment banker or other financial consultant. Having seasoned professionals on your side of the table can ensure that somebody is watching your back legally and on the business side of the deal.
4. Let your attorney negotiate . If you are negotiating with sophisticated venture capitalists or private equity parties who conduct deals for a living, you should leave the negotiating to your attorney. This is especially important if you will maintain a relationship with the other party after closing. Leave the fighting to the lawyers so you can maintain your separation from any hostile negotiations.
5. Have a strategy . Although every transaction is different, it is important for an entrepreneur to sit down with his team and develop a strategy. You should think through the issues involved, set goals and monitor the progress.