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Advisors: What’s the Real “Art” of a Deal?


Advisors: What’s the Real “Art” of a Deal?

“The art of the deal” was a phrase popularized by the 1987 book co-authored by “The Donald” himself. And while this is neither an endorsement of Trump nor the book, I do agree that there is indeed an “art” to deal making.

However, having been on both sides of the table myself and now counseling advisors on the process, I also know there’s far more to it.

In all of the deals that I’ve been involved in, there is one thing that remains certain: Deals that are meant to get made, get made. Put another way, with two motivated parties at the table, a deal is more likely to close.

With that tenet in mind, I have found that there are 5 best practices for the negotiation process that you should be aware of. While these principles apply to anyone who is bargaining to get a superior deal, they are especially applicable to an advisor moving from one major firm to another, as well as an independent business owner looking to sell his firm.

  1.  Any firm that is experienced at deal making knows to make its opening bid a pretty solid one. The days of game playing and low balling are long gone, so as the recipient of the offer, you would be wise to understand that any counter-proposals need to be particularly reasonable.
  2.  You should clearly identify the delta between the proposal and your expectations – the specific places where you believe an offer falls short –and quantify the importance of each item. It is critical to recognize that likely no offer will be perfect or match your expectations exactly, and so having a clear understanding of what is most important to you and your business is key. Take some time to identify your top priorities, deal breakers and must-haves.
  3.  If the firm making an offer is one that you really want to work for, then you need to determine if the delta that exists between you and the offer is “bridgeable”. That is, how flexible are you willing to be? Know that you will never get 100% of what you want, so be clear on those top priorities and where you can be flexible, then be willing to let go—or at least be reasonable about the rest.
  4.  How much you want the opportunity being presented will determine just how amenable you are willing to be in the negotiation process. So be realistic and know that rigidity is a deal killer.
  5. Be careful not to compare “apples to oranges”. Different firms structure deals differently, so make sure that you are taking all factors into consideration as you analyze two offers side by side. As an example, a wirehouse might be offering a 3X multiple on top line revenue, taxed as ordinary income, while an RIA firm is offering 6X EBITDA with tax advantaged status—two very different metrics used to assess the same business. These offers are not meant to equate dollar for dollar to each other; it’s up to the seller to determine what elements of a deal he values most and which value proposition he prefers.


Certainly, there is an art to deal making, however the premise that “deals that are meant to get made, get made” has far less to do with art than it does with having two motivated and reasonable parties at the table. Without real motivation on both sides, a chasm of any size between the parties will often stay that way—and “art” alone will not change that.

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