At this time of the year, many of our clients (publicly traded and private companies alike) are racing to close deals and book revenue for Q4 and the year. On top of that, our clients’ vendors are in the same position – offering end of quarter and end of year “deals” that our clients’ commercial stakeholders want to take advantage of. If I had a dime for every time I’ve heard that a deal needs to be negotiated and closed immediately because the signatory is leaving on vacation “tomorrow” (or “this afternoon”), I’d be a rich man. Successful outcomes will depend on the abilities of commercial and legal teams to come together to achieve the common objective.
Here are some suggestions for commercial and legal teams to work successfully together to close End of Quarter/ End of Year.
- For sales organizations, draft and maintain a good template contract that reflects your business model. The template should be reasonable and industry standard, protective but not overtly one-sided. Remember, your contract is a sales asset.
- Present that template contract to the other party to begin contract negotiations. To the extent possible, keep the deal on your template. Variations from your contract’s terms create risk and impact the value of the deal.
- Get deals to your counsel early. A ‘heads up’ might help with planning, but not at the risk of “crying wolf” as this negatively impacts everyone.
- Don’t “throw deals over the fence” to your counsel. In other words, before sending a redline to your counsel, the commercial representative should review the issues on the table, separate legal from business issues (as much as possible), start handling the business issues in tandem and be ready to shepherd the deal through the negotiation processes (The commercial stakeholder of the team is the conductor; your counsel is part of the orchestra).
- Ideally, commercial representatives will adopt an attitude that legal issues are a part of the overall commercial negotiation.
- Check with your counsel before committing to calls and timelines.
- Let’s all focus on THIS quarter’s deals. (Of course, we defer to commercial management on priorities, but I suspect management will agree).
- Remember that some customer procurement playbooks will create pressure to leverage better discounts and other concessions (e.g. “the CFO is going on vacation tomorrow” or “Our template contract is not industry standard”). This is part of the dance, so expect it and remember to use your own levers.
- Don’t move forward with a teleconference if customer’s attorney is on the call until you get your own attorney on the call.
- Remember that reviewing and responding to contract revisions takes time. Be reasonable in your expectations. Our goal is to help our clients close as many deals as possible, as efficiently and prudently as possible, before the end of the quarter.