Effective Agreements Services


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  • Thank Darrell Lynch for Inviting me to present Effective Agreements and its services, to you
  • Jim Donald in love with the joint venture The Italian deal
  • 40 agreements
  • Missing written maintenance policy
  • Strategic Alliance with PKI
  • Company with maintenance policy in every agreement
  • Maintenance policy in every agreement
  • CEO’s admin
  • First pass valuation
  • Effective Agreements Services

    1. 1. Effective Agreements Summary Presentation SBA Networking Group December 5, 2011
    2. 2. Agenda <ul><li>Who is this guy? (General Background) </li></ul><ul><li>Poor Agreement Processes </li></ul><ul><li>An Element of Risk </li></ul><ul><li>Effective Agreements’ Solutions </li></ul><ul><li>Mergers and Acquisitions </li></ul><ul><li>Summary </li></ul>
    3. 3. General Background Information <ul><li>President and Founder of Effective Agreements </li></ul><ul><li>V. P., Corporate Business Development, DSC Communications Corporation ($1.4 billion company) </li></ul><ul><ul><li>Ran the M&A Group for twelve years </li></ul></ul><ul><ul><li>Over $500 million of transactions on the buy- and sell-side </li></ul></ul><ul><ul><li>Strategic alliances and other major agreements </li></ul></ul><ul><li>V.P., Business Development, TelOptica </li></ul><ul><ul><li>Software start-up </li></ul></ul><ul><ul><li>Raised $15.2M in venture capital </li></ul></ul><ul><li>Eleven years helping small- and medium-sized businesses improve their business agreements </li></ul>
    4. 4. Poor Agreement Processes Frequent Causes and Results
    5. 5. The Wrong Person in Charge <ul><li>No full time, experienced contract person on board </li></ul><ul><li>Managing the process falls to: </li></ul><ul><ul><li>The senior management team </li></ul></ul><ul><ul><ul><li>Often the CFO </li></ul></ul></ul><ul><ul><li>Subject matter expert </li></ul></ul><ul><ul><li>Neither may have expertise in contracts </li></ul></ul><ul><li>Person in charge may be “in love” with the deal </li></ul><ul><li>Executives may feel that they can negotiate unprepared – from “their gut” </li></ul>
    6. 6. Results <ul><li>Management or subject matter expert becomes the “choke point” in the agreement process </li></ul><ul><ul><li>Backlog builds up </li></ul></ul><ul><ul><ul><li>Seen 40 agreements </li></ul></ul></ul><ul><li>Loss of focus on the core business </li></ul><ul><ul><li>Person in charge over-extended </li></ul></ul><ul><ul><li>“ Day job” conflicts with completing the negotiation and vice versa </li></ul></ul><ul><li>Unprepared negotiator always loses </li></ul><ul><li>Leader in love with the deal may push it through </li></ul>
    7. 7. Results (Cont.) <ul><li>Process takes longer </li></ul><ul><ul><li>Experience counts </li></ul></ul><ul><li>Attorneys receive documents where the business deal is hazy – and bill for getting up to speed </li></ul><ul><li>Some deals may not be accomplished </li></ul>
    8. 8. Suspect Templates <ul><li>What is actually the genesis of most agreement templates used by small companies? </li></ul><ul><li>Template agreements are brought over by an executive from a previous company </li></ul><ul><ul><li>Often from another kind of business entirely </li></ul></ul><ul><ul><ul><li>Software versus hardware </li></ul></ul></ul>
    9. 9. Results <ul><li>Key: agreements have been previously negotiated </li></ul><ul><ul><li>Template’s terms reflect concessions that were made in return for something of equal value </li></ul></ul><ul><ul><li>Those points are ceded without receiving anything in return when the template is used </li></ul></ul><ul><li>Management is not trained to modify an old agreement for a new situation </li></ul>
    10. 10. Other Results of a Poor Process <ul><li>Small companies fail to be aggressive enough when dealing with larger companies </li></ul><ul><ul><li>Fear being seen as “hard to work with” </li></ul></ul><ul><ul><li>Will actually be perceived as “business savvy” </li></ul></ul><ul><li>Lack proper negotiating team and assignments </li></ul><ul><ul><li>One to negotiate </li></ul></ul><ul><ul><li>One to take notes </li></ul></ul><ul><ul><li>One to listen </li></ul></ul><ul><li>Take on unnecessary risk and potential costs </li></ul>
    11. 11. A Matter of Risk <ul><li>All of the poor agreement processes above introduce unnecessary risk into your Client </li></ul><ul><li>Client may needlessly accept onerous terms that threaten its very survival </li></ul><ul><li>Distraction of management from the core business is inherently risky </li></ul>
    12. 12. Effective Agreements Solutions
    13. 13. Effective Agreements’ Method <ul><li>Begin with a blank flip chart </li></ul><ul><li>Use outlines to prevent omissions </li></ul><ul><li>Apply our experience to negotiate a realistic arrangement that will work for both parties </li></ul><ul><li>We do the drafting of the agreement </li></ul><ul><li>Successful in major international relationships </li></ul><ul><li>Have had other side agree to pick up 1/2 our fee </li></ul>
    14. 14. Where Templates Are Needed <ul><li>Original drafting or modifications </li></ul><ul><li>Avoid errors of omission </li></ul><ul><li>“ Key employees” who live with the relationship day-to-day are included </li></ul><ul><ul><li>Accounting, marketing, maintenance, etc. </li></ul></ul><ul><li>We help avoid: </li></ul><ul><ul><li>Duties the company cannot perform </li></ul></ul><ul><ul><li>Sales channel conflict </li></ul></ul><ul><ul><li>Revenue recognition questions </li></ul></ul><ul><li>Work with management and their attorneys to develop solid but adaptable agreement templates </li></ul>
    15. 15. On the Receiving End <ul><li>Other side insists on using its agreement or marks up client’s draft </li></ul><ul><li>Effective Agreements prepares a response </li></ul><ul><ul><li>Provides management with a memo on the changes made </li></ul></ul><ul><ul><li>Legal issues are highlighted for involvement of attorneys </li></ul></ul><ul><li>We can negotiate for the client if asked </li></ul><ul><ul><li>Management and attorneys are always informed and consulted on important issues </li></ul></ul>
    16. 16. Additional Value Added <ul><li>Where client needs to hold the line on a point, Effective Agreements can be the “bad guy” </li></ul><ul><li>We handle the logistics of circulating drafts to push the agreement to conclusion </li></ul><ul><li>Client stays focused on the core business </li></ul><ul><li>Very fast turn-around times on drafts – hours rather than days </li></ul><ul><li>Attorney receives a draft with complete business sections that are crystal clear </li></ul><ul><ul><li>May review business section, but do not have to draft from scratch </li></ul></ul>
    17. 17. Mergers and Acquisitions Techniques proven by $500M of transactions
    18. 18. Sell-Side <ul><li>Create superior data rooms – physical or virtual (VDR) </li></ul><ul><ul><li>Knowledge of several VDR products </li></ul></ul><ul><li>Supervise buyer’s due diligence </li></ul><ul><li>See that the management team has time to run the business, protecting the asset </li></ul><ul><li>Aid with definitive agreements, including negotiation </li></ul>
    19. 19. Buy side <ul><li>Preliminary analysis of seller’s data room </li></ul><ul><li>Supervise the entire due diligence process </li></ul><ul><li>Protect the asset from damage caused by the process </li></ul><ul><li>Buyer’s management stays focused: </li></ul><ul><ul><li>Strategic acquisition issues </li></ul></ul><ul><ul><li>Transition planning! </li></ul></ul><ul><li>Aid with definitive agreements, including negotiation </li></ul>
    20. 20. In Summary <ul><li>Effective Agreements: </li></ul><ul><li>Breaks up the backlog of agreements </li></ul><ul><ul><li>Speeding transaction process </li></ul></ul><ul><ul><li>Faster turnaround </li></ul></ul><ul><li>Improves agreement templates </li></ul><ul><li>Reduced business risk, resulting from our experience </li></ul><ul><li>Leaves Client management free to concentrate on the core business </li></ul>
    21. 21. Contact Information Tom Phillips Effective Agreements, Inc. 972.235.7656 (Office) 214.549.1770 (Cell) [email_address] www.effectiveagreements.com www.linkedin.com/in/tomphill