4 ms·

>One thing that it seems people often forget is that, in business, if you're truly entering in to mutually beneficial agreements (whether it's hiring someone or

by lsc 12y ago

>One thing that it seems people often forget is that, in business, if you're truly entering in to mutually beneficial agreements (whether it's hiring someone or being acquired), both sides generally will try to come to some sort of arrangement that makes sense for both sides. In other words, when it's understood that an agreement is win-win, then both sides are motivated not just for themselves but for the other side as well. This has... not been my experience at all. I mean, maybe it's just that I haven't worked on big enough deals? But my experience is that flexibility exists at the "handshake deal" size, but once the total deal value surpasses, say, the value of a nice used honda civic, professionals are excellent at squeezing as much surplus value (in dollars, of course) from the deal, and negotiation on things that are not money is largely impossible. Now, for me? this has been true for every large deal. However, every large deal I've done has been with someone staggeringly larger than I am. (the largest was probably a co-lo deal with a staggeringly large co-location provider... with a total deal value above a quarter million bucks, so I'm small fry.) Players that are my size or smaller are willing to be super flexible about everything, like you describe, but the deal value is usually so small that the only profit to be had is that it's fun to work with them, or that I get to learn something from them. And yeah, that's good and important and stuff, and I do a lot of deals at that level, but I almost think of this more as a social thing; network building and/or drinking with friends. I could do deals at that level all day every day and make rent, but there's no way I'd come close to what I can get as a moderately competent contract linux sysadmin working for a giant faceless company. Why is this? Well, small companies, generally speaking, just don't have huge amounts of cash to throw around. And large companies? for large companies, I think it has a lot to do with what tptacek said about legal costs. A long time ago, there was talk of selling my company. I mean, it ended up being that they wanted to hire me for two years, at 30% more than I could get as a consultant, plus some performance bonuses that would depend as much on their actions as mine. But the total deal value would have been almost but not quite twice my previous largest deal value. Still, small potatoes, by the standards of such things. They were larger than I was... but still pretty small by industry standards, so they were willing to be super flexible, though they needed to keep the deal size super small. The point I was making was that legal would have eaten all of the difference between what they wanted to pay for me & the company and what I can get paid as a contractor. The less standard the deal, the more it costs in legal. I imagine this is why large companies are so... inflexible on sub-MM deals. They have standard deals that have been approved by legal, and they don't want to spend the money to get a new deal approved. So.. yeah, that's my experience. Deals are either handshake deals, with amounts of money changing hands that really don't matter (and I've bought companies at that level; It's common in the hosting industry, when someone is tired of running their company.) or they are large enough that legal is involved, in which case, unless it's a truly staggering amount of money, the giant cost of legal makes the deal way less interesting. I've seen the same thing in employment. If you wanna work for someone like me for $15/hr, you can get all kinds of flexibility, no problem. If you want to work for said faceless company and make decent money? you do it their way. You conform to their standard deal. I mean, they have a lot of standard deals you can conform to... and conforming to any of them is just fine, but pick one and quit fucking around. (I mean, if you are an incredible person, again, it's probably different. But if you are a mortal who maxes out somewhere between $70 and $100/hr like most of us... you conform to their deal structure, or you come work for someone like me at 1/5th that.)

JangoSteve 12y ago
I'm not sure what you're trying to say exactly. If it's not your experience that both sides usually want to make the deal happen when the deal is genuinely mutually beneficial, then I'd say you're probably working with the wrong people (it's amazing how many perverse incentives exist in many companies and some entire industries). I'm not saying that doesn't happen. I just prefer to avoid those types of deals if possible. In fact my point was to the effect that things are quite a bit less scary when you do avoid those types of deals. But my experience with both big and small deals, is that there's often much more flexibility than people assume, and the only way to know how much flexibility there is, is to push back a little (not for the sake of pushing back, but if there's something that you genuinely want or that bothers you about the deal, speak up). Also, you seem to be saying that when deals get to a size large enough to warrant participation of legal departments, that there is no flexibility. That is the opposite of true, as the only reason the legal department would be involved in the first place is to work out the "custom", or non-standard, parts of the deal. If there were zero flexibility in the deal, then everyone would just use the standard documents that already exist for that deal, fill in the blanks, and sign away. Why do large deals often result in greater than $50k-$200k or more in legal costs though? It's because the two legal teams are actually negotiating (i.e. fleshing out and changing the terms of the deal that need to be changed).
- lsc 12y ago
  >I'm not sure what you're trying to say exactly. My point here is that unless the deal is large enough to cover legal costs, you have to fit your deal into the standard, pre-approved deal structures. This flexibility of which you speak, sure, some flexibility exists within the blanks on those forms, but the deal structure is fixed, at least at the deal sizes where I live. >If it's not your experience that both sides usually want to make the deal happen when the deal is genuinely mutually beneficial, then I'd say you're probably working with the wrong people (it's amazing how many perverse incentives exist in many companies and some entire industries). I'm not saying that doesn't happen. I just prefer to avoid those types of deals if possible. In fact my point was to the effect that things are quite a bit less scary when you do avoid those types of deals. Sure, they want to make it happen, but they are only willing to negotiate, as you said, about what to put in the blanks on the form. My theory is that legal makes non-standard deals not make sense until you get into the multi-million dollar range. If you have a $400,000 deal, and you spend $25K on lawyers and so does the other guy, well, that's more than 10% of the deal value gone. From my understanding, on a company acquisition of that size, $25K is on the very low end of what one party might pay for legal help. It could easily be twice that. The time I had an opportunity to see such a deal? that 10-20% would have been the profit on the deal. (Interestingly, the deal might have gone through, if we knew of a standard deal structure... or trusted oneanother more.) My theory as to why I don't see the deals you say are the only deals to take, where there is both significant money and significant flexibility is that I don't bring enough value to the table to pay for legal. >Also, you seem to be saying that when deals get to a size large enough to warrant participation of legal departments, that there is no flexibility. That is the opposite of true, as the only reason the legal department would be involved in the first place is to work out the "custom", or non-standard, parts of the deal. If there were zero flexibility in the deal, then everyone would just use the standard documents that already exist for that deal, fill in the blanks, and sign away. You are confused because I mentioned the really small deals. If I do a deal with someone I know that is just a few grand, we can do it on a handshake. But most of those deals are small that while I could pay rent that way, there's no way I could make as much as a mediocre contract sysadmin. I understand that enabling non-standard deals is one of the things that lawyers are for. I said: >>The less standard the deal, the more it costs in legal. I imagine this is why large companies are so... inflexible on sub-MM deals. so I largely don't think we're in disagreement. You are probably just dealing in larger deals than I am... that or you are willing and able to do larger deals than I am on trust.

by lsc 12y ago

JangoSteve 12y ago

I'm not sure what you're trying to say exactly. If it's not your experience that both sides usually want to make the deal happen when the deal is genuinely mutually beneficial, then I'd say you're probably working with the wrong people (it's amazing how many perverse incentives exist in many companies and some entire industries). I'm not saying that doesn't happen. I just prefer to avoid those types of deals if possible. In fact my point was to the effect that things are quite a bit less scary when you do avoid those types of deals. But my experience with both big and small deals, is that there's often much more flexibility than people assume, and the only way to know how much flexibility there is, is to push back a little (not for the sake of pushing back, but if there's something that you genuinely want or that bothers you about the deal, speak up). Also, you seem to be saying that when deals get to a size large enough to warrant participation of legal departments, that there is no flexibility. That is the opposite of true, as the only reason the legal department would be involved in the first place is to work out the "custom", or non-standard, parts of the deal. If there were zero flexibility in the deal, then everyone would just use the standard documents that already exist for that deal, fill in the blanks, and sign away. Why do large deals often result in greater than $50k-$200k or more in legal costs though? It's because the two legal teams are actually negotiating (i.e. fleshing out and changing the terms of the deal that need to be changed).

lsc 12y ago
>I'm not sure what you're trying to say exactly. My point here is that unless the deal is large enough to cover legal costs, you have to fit your deal into the standard, pre-approved deal structures. This flexibility of which you speak, sure, some flexibility exists within the blanks on those forms, but the deal structure is fixed, at least at the deal sizes where I live. >If it's not your experience that both sides usually want to make the deal happen when the deal is genuinely mutually beneficial, then I'd say you're probably working with the wrong people (it's amazing how many perverse incentives exist in many companies and some entire industries). I'm not saying that doesn't happen. I just prefer to avoid those types of deals if possible. In fact my point was to the effect that things are quite a bit less scary when you do avoid those types of deals. Sure, they want to make it happen, but they are only willing to negotiate, as you said, about what to put in the blanks on the form. My theory is that legal makes non-standard deals not make sense until you get into the multi-million dollar range. If you have a $400,000 deal, and you spend $25K on lawyers and so does the other guy, well, that's more than 10% of the deal value gone. From my understanding, on a company acquisition of that size, $25K is on the very low end of what one party might pay for legal help. It could easily be twice that. The time I had an opportunity to see such a deal? that 10-20% would have been the profit on the deal. (Interestingly, the deal might have gone through, if we knew of a standard deal structure... or trusted oneanother more.) My theory as to why I don't see the deals you say are the only deals to take, where there is both significant money and significant flexibility is that I don't bring enough value to the table to pay for legal. >Also, you seem to be saying that when deals get to a size large enough to warrant participation of legal departments, that there is no flexibility. That is the opposite of true, as the only reason the legal department would be involved in the first place is to work out the "custom", or non-standard, parts of the deal. If there were zero flexibility in the deal, then everyone would just use the standard documents that already exist for that deal, fill in the blanks, and sign away. You are confused because I mentioned the really small deals. If I do a deal with someone I know that is just a few grand, we can do it on a handshake. But most of those deals are small that while I could pay rent that way, there's no way I could make as much as a mediocre contract sysadmin. I understand that enabling non-standard deals is one of the things that lawyers are for. I said: >>The less standard the deal, the more it costs in legal. I imagine this is why large companies are so... inflexible on sub-MM deals. so I largely don't think we're in disagreement. You are probably just dealing in larger deals than I am... that or you are willing and able to do larger deals than I am on trust.