The 10 Deal Commandments

We recently hired a new Business Development Associate (Welcome, Holly!) onto the Investing team. In advance of that, Emily did some great work documenting a lot of our thinking and processes to make Holly’s transition as smooth as possible and set us up to scale the team in the future. 

One of my favorite things that came out of that work were her 10 Deal Commandments, an abridged version of which is presented below. Enjoy!

1. Thou shalt protect and promote trust in every interaction.
   Reputation is the hardest thing to build in investing (yes, harder than raising capital), and the easiest thing to lose. If sellers won’t trust us, we can’t win deals (or we’ll have to significantly overpay). 

2. Thou shalt be responsive.
   Responsiveness is an expression of interest. And if we’re not interested, we should respectfully communicate that.

3. Thou shalt be on the lookout.
   Always be selling, right? Well, we don’t want to be obnoxiously pitching all the time, but we do want to be curious about companies and people, inviting questions in return. Encourage curiosity by being curious of others.

4. Thou shalt be high empathy, low judgment.
   There is no perfect business, so judge not lest thee be judged.

5. Thou shalt not give answers prematurely or make promises you can’t keep.
   As a potential investor, we always have less information than a business owner or operator. Don’t commit to anything, unless you know.

6. Thou shalt avoid formality and promote practicality and authenticity.
   Formality can be effective in intimidating others, establishing hierarchy, and keeping exchanges sterile. None of those things are helpful to anyone.

7. Thou shalt be a helper in service to others.
   If someone reaches out for advice or input on a situation, respond as best you can. Thoughtful requests deserve thoughtful replies.

8. Thou shalt consider and communicate on all the pieces of a deal puzzle – people, situation, operations, market, and numbers.
   When you are getting to know a company, do not lead with or purely focus on the quantitative attributes. Yes, financial performance and scale matters. But other elements matter just as much.

9. Thou shalt not force us as the only answer, and should encourage broad understanding of marketplace options.
   A great offering doesn’t have to be oversold. Permanent Equity offers a great solution for certain situations, but it’s dependent on the business model and owners being a good fit. Sometimes we’re a good fit, but not the best fit, and that’s fine.

10. Thou shalt not hesitate to communicate. 
    Situations materialize and disappear all the time. Coordination is critical to ensuring our team is never the reason something goes MIA, so don’t hesitate to signal to the team when a deal may be on your radar. Investing is a team sport, and you won’t waste anyone’s time.

Have a great weekend.

– By Tim Hanson

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