Why A Sense Of Urgency Matters In Business Deals

By Richard D. Harroch and Dominique A. Harroch

As a longtime M&A attorney, entrepreneur, and venture capitalist with over 200 major deals under my belt, I have learned a lot of important lessons. One important business lesson is that time is one of the most critical factors in determining the success of any deal or transaction. The saying “time is the enemy of all deals” highlights a fundamental truth in business: the longer it takes to negotiate, the more likely it is that the deal will fall apart.

Prolonged negotiations can lead to various complications, including new offers, deal fatigue, or miscommunication, all of which can derail a business agreement that seemed promising at the start. It’s essential to recognize that speed and decisiveness are often key factors in successfully closing deals.

A sense of urgency doesn’t mean rushing haphazardly into decisions, but it does mean understanding the importance of acting quickly and efficiently. Deals that drag on are at risk of losing their value and relevance, and often, they never materialize. By establishing clear timelines and making timely decisions, businesses can ensure that they don’t miss valuable opportunities, even as they remain flexible and thorough in their negotiations. This article, which uses research assistance and insights from AI, will explore why urgency is crucial in business and why a delay in closing deals can lead to missed opportunities and failed negotiations.

These lessons particularly apply to mergers and acquisitions, major financings, and joint ventures.

1. A Better Deal May Come Along

Time is often one of the most significant factors in a deal. When negotiations drag on too long, there’s always a risk that a better deal may arise. Competitors may come in with more attractive offers, or external market conditions might shift, rendering the deal less appealing. In business, the longer you wait, the more likely another opportunity or competitor may catch the attention of the other party involved in the deal.

Key Insights:

• Opportunity cost: Time spent negotiating is time competitors can use to improve their own offers.
• Competitive landscape: Businesses are often presented with multiple offers at once, making time critical.
• Momentum loss: Delays in decision-making can lead to the loss of momentum in the negotiation.
• Changing market conditions: The market may shift, rendering the deal less attractive after time passes.

2. Deal Fatigue Can Set In

As deals drag on, deal fatigue is a real risk. This can happen when one or both parties grow tired of the negotiation process, especially if it involves long discussions, legal hurdles, or repeated revisions. When deal fatigue sets in, both sides may begin to lose interest or enthusiasm, and even the most promising deal can fall apart due to frustration. This is why a sense of urgency is important—to keep everyone focused and ensure that the deal doesn’t lose its momentum.

Key Insights:

• Loss of focus: Prolonged discussions can cause key decision-makers to lose interest in the deal.
• Frustration builds: Time-consuming negotiations can lead to impatience
• Missed opportunities: Deal fatigue can cause delays in decision-making, causing opportunities to slip away.
• Diminished energy: The more time spent negotiating, the more effort it takes to keep everyone on track.
• Hesitation: Deal fatigue often leads to hesitation or a lack of confidence in moving forward.

3. Negotiations Dragging on Can Indicate a Difficult Partner

Long negotiations can sometimes be a red flag. If the process is taking too long, it may signal that one party is difficult to deal with and that complexity could carry on post-deal. A lengthy negotiation process often raises questions about a partner’s flexibility, willingness to compromise, and ability to meet deadlines. Such behavior might indicate that the relationship will be challenging after the deal is completed, making the agreement less desirable for the other side.

Key Insights:

• Future struggles: If an agreement takes too long, it may reflect the potential for challenges during execution.
• Communication barriers: Long timelines can highlight issues with communication and compromise.
• Lack of flexibility: A party that insists on multiple revisions during negotiation might prove to be inflexible.
• Hidden agenda: Prolonged negotiations could signal that one side is stalling for strategic reasons.

4. Legal Fees and Costs Add Up

As negotiations stretch out, the financial cost of legal fees, consultants, and other resources involved in drafting and reviewing agreements increases. While initial costs may seem manageable, the longer the deal takes, the higher the overall expenses become. Over time, these growing costs can make the deal feel less worthwhile. The expenses can become so significant that both parties may ultimately decide that the deal is no longer financially feasible.

Key Insights:

• Resource drain: Prolonged negotiations drain resources that could be used elsewhere in the business.
• Budget overruns: The longer the deal takes, the more unpredictable the final cost becomes.
• Diminishing returns: The return on investment decreases the longer the deal takes to finalize.
• Potential legal complications: Prolonged negotiations may lead to confusion and legal complications.

5. Decision Makers May Move On

In many business negotiations, key decision-makers may change roles, departments, or even companies during the negotiation period. This personnel turnover can significantly disrupt the process, causing delays or even halting the deal. The loss of a crucial decision-maker can leave the deal in limbo, especially if the new decision-maker doesn’t prioritize the deal or has a different approach. A sense of urgency helps ensure that the people who initiated the deal are the ones who finalize it.

Key Insights:

• Leadership shifts: New leadership may have different priorities and be less inclined to push the deal through.
• Continuity is key: Having the same decision-makers throughout negotiations helps ensure consistency.
• Delay impact: The longer negotiations stretch, the more likely a personnel change will occur.
• Lack of commitment: If decision-makers aren’t fully committed, the deal can fall apart.

6. A Slow Pace of Negotiations May Cause a Party to Decide It Will Be Unlikely to Finalize a Deal

Long delays in negotiations can lead one party to conclude that the process is more trouble than it’s worth. When negotiations drag on without resolution, a sense of frustration builds, and it’s possible that one party will decide that the deal isn’t worth pursuing anymore. Dealmakers may look at the slow pace of negotiations as a sign of indecision or lack of urgency on the other party’s part, and as a result, they may walk away from the table. In these cases, the deal is often abandoned, and both parties miss out on potential value.

Tips to Get a Business Deal Done Quicker

To help close a deal quickly and efficiently, consider these actionable tips:

• Consider having a letter of intent or term sheet: This is typically non-binding but is a way to ensure that the parties are in agreement in principle on the big-picture issues.
• Set clear deadlines: Establish timelines for each phase of the negotiation to keep things moving.
• Communicate: Keep the other side informed of your process for getting internal buy-ins and approvals
• Compromise early: Be willing to make concessions on smaller issues to keep the deal moving forward. Don’t go back on initial compromises. If a point the other party wants doesn’t matter much to you, then give it.
• Each side should have a lead negotiator authorized and empowered to make quick concessions: This is essential.
• Focus on what matters: Stay focused on the deal’s core objectives and avoid getting bogged down in less critical details.
• Have a deal-savvy lawyer: You want a lawyer experienced in getting similar deals done who will quickly respond to emails and turn around drafts of the agreement. You need a lawyer who doesn’t just point out problems but who can quickly suggest reasonable practical solutions.
• Avoid entirely rewriting the document posed by the other side: Start with a reasonable form of agreement and avoid trying to change a draft in its entirety.
• Understand that compromises are necessary: You can’t get an agreement 100% in your favor, so compromises will be required to get a deal done.
• Continue to be courteous and professional, even if you are frustrated at the pace or process of the negotiations: You will likely need to work with the other side after you sign.
• Know when to stop negotiating: No deal is going to be perfect. At some point, you have to say it’s good enough.
• Understand the negotiation dynamics: Who wants the deal more? Is it a big problem for the other side if a deal doesn’t get done? That affects your negotiation leverage.

Conclusion on Urgency in Business Deals

The ability to close deals swiftly is an essential skill in business, and the longer a deal takes, the greater the risks. Prolonged negotiations lead to missed opportunities, rising costs, deal fatigue, and sometimes even the total abandonment of an agreement. A sense of urgency keeps everyone focused, minimizes unnecessary delays, and increases the likelihood of closing deals successfully. Speed doesn’t mean rushing— it’s about maintaining momentum, keeping everyone engaged, and finalizing the deal while the opportunity is still valuable.

Ultimately, urgency is key to a successful business deal. By setting clear timelines, staying engaged, and moving quickly to address issues, businesses can minimize the negative impacts of delays. Whether you’re negotiating a sale, a partnership, or a merger, time is a crucial factor in securing the deal and achieving the desired outcome.

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Copyright (c) by Richard D. Harroch. All Rights Reserved.

Richard D. Harroch is a Senior Advisor to CEOs, management teams, and Boards of Directors. He is an expert on M&A, venture capital, startups, and business contracts. He was the Managing Director and Global Head of M&A at VantagePoint Capital Partners, a venture capital fund in the San Francisco area. His focus is on internet, digital media, AI and technology companies. He was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, Fox Business and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book published by Bloomberg on mergers and acquisitions of privately held companies. He was also a corporate and M&A partner at the international law firm of Orrick, Herrington & Sutcliffe. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn.

Dominique Harroch is the Chief of Staff at AllBusiness.com. She has acted as a Chief of Staff or Operations Leader for multiple companies where she leveraged her extensive experience in operations management, strategic planning, and team leadership to drive organizational success. With a background that spans over two decades in operations leadership, event planning at her own start-up and marketing at various financial and retail companies, Dominique is known for her ability to optimize processes, manage complex projects and lead high-performing teams. She holds a BA in English and Psychology from U.C. Berkeley and an MBA from the University of San Francisco. She can be reached via LinkedIn.