Strategies for Successful Deal Structures with Andrew Jeffs

Mike Lander (00:15.522)
So welcome everyone to Higgle, the B2B Sales Club podcast. And today I'm delighted to have Andrew just with us. Andrew, welcome to the podcast.

Andrew Jeffs (00:32.006)
Thanks Mike, good to be on.

Mike Lander (00:34.334)
So Andrew, how long have we known each other?

Andrew Jeffs (00:37.951)
We are well into Olympic cycles and I think it's probably more than 10 years, isn't it now Mike? It certainly feels that way.

Mike Lander (00:45.618)
I think it is exactly. So yeah, I've known Andrew for a long time. What we try and do on this podcast is we try and give different perspectives to salespeople on negotiating deals, on winning more deals and some of the complexities. And so I bring in different guests and Andrew's background which you'll give more about in a second is very much on the deal making front, buying and selling companies. And so that gives a very different perspective on negotiating. So before I get into all that, Andrew, talk about your background.

What is your background? What do you do?

Andrew Jeffs (01:18.23)
Sure, so I guess, Mike, the way I'd explain it over a sort of dinner party conversation is that I'm a I'm a corporate finance advisor, that always sounds really boring, but the crux of it is really helping principally founders when they come to exit their business and then approaching that negotiation, approaching the whole process of how do we tell their story, how do we get buyers interested and then how do we strike the best deal for them and a lot of that stuff at the back end really boils down to negotiations.

That's a job I've been doing for 25 years now. My sons think that's utterly tragic that their dad has been doing it for more than half his life. What I always tell people over dinner is that what keeps it fresh is every deal's different, every client's different, every negotiation's different. So it's not a case of doing the same thing over and over and that's what keeps it lively.

Mike Lander (02:08.138)
I would agree. And in fact, our son, I'm not quite sure he knows entirely what I do, apart from I talk a lot to people on podcasts and he listens on YouTube, which is great. So just before we get into the detail, we've got like kind of three or four questions to go through. But what's kind of always on my mind is, is that people think you're either a natural negotiator, brilliant at negotiating, I wish I could be like them, or

you can't negotiate to save your life. They don't believe it can be trained. Just before we get into our questions, what's your view on, can anyone be trained to be a great negotiator? Or is there some secret magic sauce that everyone needs?

Andrew Jeffs (02:52.982)
That's an interesting one Mike. I don't think there's one secret source. I think the key to this, as with a lot of people being successful in their work and careers, is about authenticity. And it's about actually finding your style. So I will have colleagues of mine who will approach a negotiation in a very different way. But I think it's all about getting the result. And I think if you try to approach getting the result by pretending to be someone you're not, you're probably going to fail. So I think it's about finding an authentic style.

and using that as your way to steer through a negotiation.

Mike Lander (03:24.77)
Definitely. And I think throughout my kind of negotiating career, that's been a very lasting thread is just being authentic. Don't, I'm not trying to be someone that I've seen and go, I'll just mimic them. I'm just being myself. And I think another thing that I've picked up, be interested in your view, we will get to the questions, I promise we did prepare. But another thing is not being afraid to just kind of stop the negotiation and say, I've kind of lost the plot a bit here.

Andrew Jeffs (03:46.114)
Thank you.

Mike Lander (03:54.91)
I thought we were negotiating this, but it sounds like that's not what you want? And just having that honest, open conversation? What's your experience of that?

Andrew Jeffs (04:04.302)
Yeah, I think you can get a bit of... I'm a big rugby fan, Mike, so obviously World Cup's one at the moment. You talk about, sometimes talk about teams having white line fever, and I think people can get fixated on, I feel I'm so close to the objective, if I can just push on through with what I'm trying to win on this, I'll get there. And actually, I think what you need to sometimes do, and I had a Aussie client years ago who had this brilliant phrase, he said, he said, Andrew, I think this deal's got a bit too much hair on it.

Mike Lander (04:09.946)
Ah, yep.

Andrew Jeffs (04:32.038)
And I think it's about sometimes when you're in those moments, true, I still use that, true, it's just stepping back and saying, hang on, not just what am I trying to achieve here, what do I know the other side's trying to achieve and actually do we need a reset?

Mike Lander (04:46.182)
Exactly. Do we need a reset? Absolutely. And also, just understanding people's motivations. What's driving someone to do this deal? Not what they've said, not what they've demanded, but what's really motivating them in their core? What are their core interests? Getting to that, I think, is a bit of a breakthrough moment in my experience.

Andrew Jeffs (05:07.33)
Yeah, I agree. And I think that's where for us, because our negotiations, you know, it's typically not some big set piece Hollywood meeting. It's generally something which runs over probably a couple of months with the preferred party at the back end of a deal, because we're not just negotiating a price, we're negotiating how that price is paid. We're negotiating when it's going to be paid, what conditions, potentially what clawbacks there are against that price later on for contractual claims. So it's a very complex picture. It always plays out over.

months rather than weeks. And that gives you a chance, but what that does, it gives you a chance to build rapport with the people you're negotiating with on the other side. And I think that's when you can start to unlock what's their motivation. And when we're fighting a founder's corner, might be a big corporate on the other side, might be a big investor. Actually, you've not got to be intimidated by that. There's someone there who's trying to secure a deal for their boss, for their firm.

for all sorts of good reasons and actually embrace that and try and help unblock it and kind of solve the deal overall. That's very much how I tried to go into those negotiations.

Mike Lander (06:14.442)
Absolutely. So, questions. Negotiation mindset. Let's just talk about how do you get into the negotiating mindset and why is it so important?

Andrew Jeffs (06:26.286)
So I think it's really key that you recognise that you've got to have a clear idea of some objectives from yours that are absolutely fundamental and one of the reasons that I how I encourage people to think about it. In my spare time on Wednesday nights actually, yesterday evening, I'm a scout leader and I think you've got to sort of find your inner boy scout, right? You've got to, you know, be prepared is everything.

Mike Lander (06:48.49)
Oh cool.

Andrew Jeffs (06:54.094)
And I think actually if you can ahead of the first discussions really be clear about what looks like a good deal for me, what are my key points, what are the points that I know are important to the other side that maybe aren't key for me and really be very disciplined about writing those down. I always have a note of them. It's so hard. You go in thinking I've got a negotiating brief of six points. I know what they are. You play them over in your mind. You get into the real conversation and actually...

you realise you've nailed four or five of them and what was the last one. So I think it's really important that you cold tell that, always find a moment, whether it's, you know, stepping into a room, stepping into a coffee shop, put it down. And that will avoid that kind of white line fever of, great, I've got three of the points. Hang on, what were the other ones? And that's when things can slip through the track. So I think it's about for me being calm, about being prepared and having that rigour around what your framework is and what your objectives are.

Mike Lander (07:48.63)
Completely agree, preparation and all the research tells us preparation is the key. I mean, in a different world, marketing agencies negotiating with their clients on a creative piece of work. They might spend 100 person hours on the creative and the client loves it. And then they get asked to go and negotiate the contract and they spend half an hour in the taxi preparing. It's ludicrous.

Andrew Jeffs (08:07.354)
Yep.

Andrew Jeffs (08:16.69)
that does not sound like a good split of time.

Mike Lander (08:20.834)
So, yeah, so I completely agree about preparation. How do you get into a calm mental state? We've all been there. If your counterparty is as well-prepared but turns slightly aggressive, how do you calm your mind? How do you stop the heart racing? How do you prevent anxiety?

Andrew Jeffs (08:43.75)
So I'm a great believer in, always think what's the worst that can happen. And I think the reality is that actually in negotiations, that's typically that you might need to break off. I've had negotiations where we've literally had to walk out the room or come off the call, but there will then be a better, quieter moment to come back to it. So I think when you get someone who's behaving in a manner which is really difficult and really, perhaps a sort of old school kind of macho style, I think then that's what you need to do is.

just as we said, not be afraid to press pause and have a reset if people have lost sight of the objective. If the tone of the negotiations has gone wrong, I think it's just as important to reset, say, look, this isn't getting us where we need to, we're gonna take a break. That might literally mean walking out the room. I've done that many times when you're in the lawyer's office or taking a quiet moment, but I think that's what you've got to do because there are no tricks, I would say, that are really gonna...

Mike Lander (09:30.977)
Yep.

Andrew Jeffs (09:43.034)
wrestle that back to the right place in that moment, you're going to end up with an arms race of posturing. And I would say the best approach is to say, we need that reset, let's break off here because there will almost always be another chance to come back to the table in a better way.

Mike Lander (09:58.758)
Exactly. Stories. So anything that springs to mind, no names of anyone or any company, but any kind of like funny moments or terrifying moments as a bit of an illustration of how that mindset thing works.

Andrew Jeffs (10:16.154)
So I think exactly the story that I would be thinking of in that way. We were dealing with a big US multinational on a deal a few years ago. This was actually before we were all on Teams and Zoom quite so much. So this was with someone on an audio speakerphone in the middle of a room. We were in the lawyer's office with our client, really keen to get a deal done. And the deal was being led in terms of negotiation on the other side by a classic New Yorker general counsel for this big.

big corporate and he overestimated how much we wanted to do the deal and so we're in the meeting, his voice is coming out of the speaker, bear in mind Mike, he's got no visual clues about what's going on in our room, he is really going all in here based on what he wants to say and when we outlined our position he starts laughing, like really stage laughing and pretty punchy move because...

Mike Lander (10:53.486)
Ugh.

Mike Lander (11:02.219)
Yeah, yeah.

Mike Lander (11:10.51)
Ha ha ha!

Andrew Jeffs (11:14.454)
My client, with a lot of founders who's been 20 odd years in business, it's not his first negotiation either.

Mike Lander (11:21.246)
No, exactly.

Andrew Jeffs (11:23.278)
We just, we mime to our legal representative, we said, look, we're going, tell Chris we've left. And that was what happened at that point in time. What of course then happened is he was due to report to his boss on progress. He was then unable to say that he'd made the progress. So I then get a call when we were in the pub about an hour later asking how we could pick things up and, you know, sorry if that landed on the wrong foot.

So that's when someone's really overplayed their hand. We had to not react in a way that raised the temperature, but just break off. But people do that. People really think that they can win a point by posturing. And I think that's when you've got to not engage, hit that reset button. And actually we then got into really good place and it was the building block for me having this rapport with him where I could unlock something which he had made a mess of. So, you know, out of crisis comes opportunity.

Mike Lander (12:22.07)
Absolutely. It's a great illustration. And it also illustrates having a BATMA, a best alternative to a negotiated agreement, i.e. it's not the only deal in town. And if it's not a good deal, you're absolutely prepared to walk away.

Andrew Jeffs (12:38.734)
Yeah, and I would add to that Mike, it's recognizing that, you know, in this world, you're very rarely negotiating just with one principal who can make all the decisions. Everyone's got a boss, might be shareholders, might be a business partner, might be a line manager. And actually what was key was this individual not being able to achieve what they needed to achieve and ultimately having to report it up the line and then come back. And at that point, honestly, they were in a weaker position than if they'd gone in and just played it straight. So...

Mike Lander (13:09.026)
Definitely.

Andrew Jeffs (13:10.054)
breaking it off then was the right thing to do.

Mike Lander (13:12.062)
And you've just reminded me of something as well that I say to all of my clients and everyone I've talked to about negotiations is if you say something or you say you're going to do something, if something doesn't happen, you have to be prepared to follow it through. You cannot make... You can't... I don't believe you can bluff. I don't believe you should bluff in negotiations. Because if the other party's got a strong banner and they walk away, where do you go next? You've got to crawl back to the table.

And that's a very, very disadvantageous place to be.

Andrew Jeffs (13:45.646)
Yeah, say what you mean, mean what you'll say, definitely.

Mike Lander (13:48.502)
Definitely. So next question. Making the most of being the smaller, more agile party. So this is kind of like the David and Goliath kind of problem. So how does that work?

Andrew Jeffs (14:01.542)
So I think it can feel like sometimes you've got the tanks lined up on the lawn pointing at you and you're outgunned, but actually I always feel with a founder and client like we typically have, so maybe sort of one or two key principles, we always have a tight relationship with the legal representatives on our side in the negotiations. So you're maybe talking about four to six key individuals as a tight unit going into really all negotiations across.

what's going to happen after the deal, what the contract's going to say and it will be very often the case that there are double that number on the other side. I actually think it's something that's kind of got harder in the world of doing teams calls, doing video calls where you have what I call the celebrity squares effect mic, where you've got lots of faces looking at you from the screen and it can be quite intimidating but I think actually by being able to be much clearer because you're a smaller team around your objectives.

but also actually being able to be more flexible and reactive as the negotiations play out because we've got shorter lines of communication, shorter lines of command. We can huddle quickly and change tack if we spot an opportunity. That big group of a dozen, 15 people in multiple locations, they're gonna find it a lot harder. So they might have a bit more muscle, but they've got less ability to react quickly. So that's why I think it's easier to be clear on your objectives.

you can be faster in terms of decision making as things move along. And that is something which I would never lose sight of in negotiations. It's a real, real advantage. And actually, if you've got a minute, got a great, great story about this. So you'll remember my car, our old boardroom and our old offices where we had the huge table, we sat about 16. So we were in a negotiation.

Mike Lander (15:39.999)
Yeah. Brilliant.

Mike Lander (15:45.141)
I do.

Mike Lander (15:49.846)
Very grand. It's a very grand room. It was a relatively old building. It was beautiful. Yeah.

Andrew Jeffs (15:55.546)
That's right. So West London townhouse, big high ceiling. And the boardroom table was, was absolutely huge. So we were in a negotiation where our clients, small British, niche manufacturing business, some really smart technology. And the other side of the table was, well, Saab, right? So they are, we tend to know them in this country as car makers, but they're a huge defense group, a lot of really smart, air, space, make planes, make tanks, all that kind of good stuff. And they were.

Mike Lander (16:20.767)
Yes.

Andrew Jeffs (16:25.45)
interested in really the value engineering that our client brought. So we knew there was a great strategic logic to this deal, we needed to get through the negotiations and they turned up for probably one of the key meetings with, I mean it must have been a dozen people, they didn't fit around our table, so we were sort of huddled halfway alongside and they had big four accountants advising them on their diligence, they had obviously all their expensive lawyers, but the

Mike Lander (16:42.371)
Ha ha.

Andrew Jeffs (16:54.41)
Outside of the headline price, some of the deductions and adjustments to price, which come out of the accounting due diligence, are really important, right? So you might be talking about a deal that's in the tens of millions, but you've absolutely got hundreds of thousands to play for when you come to those, those adjustments. And because we were small, nimble team, we were really clear about what we were asking for and what we saw was that because Saab's team had met...

for the first time face to face in our reception downstairs, that they weren't. And so we cheekily asked for something, which one of those points, which you know them, nine out of 10 times you know you're gonna have to give it up because it's probably off mark. But we asked. And actually we spotted the big four accountant at one end of the table, unable to catch the eye of his client on this point, who then gave it away. That really came out of, if they were the...

Mike Lander (17:27.926)
Yeah.

Mike Lander (17:37.133)
Yes.

Mike Lander (17:47.465)
Ah, yeah.

Andrew Jeffs (17:51.886)
a mirror image of us. If they'd been a small team joined up and talked about their objectives, we would have never won that point. But actually, because they were disjointed, weren't as well connected, I mean, you know, that was that was sort of half a million quid right there. So it's the kind of thing where seeing opportunity out of the fact that we were more joined up than they were, and actually not seeing those as tanks pointing at you on the lawn, but actually that they're not talking to each other was, was great. It's still

Mike Lander (17:56.191)
Exactly.

Andrew Jeffs (18:21.23)
one of the few times we've won that point but it absolutely came out of their lack of being joined up.

Mike Lander (18:27.51)
That's a brilliant example. And again, it's the kind of the speedboat versus the kind of the supertanker. You've got the ability to be much more agile in the negotiation. It's a great, great illustration. So creating alternatives. How do you create alternatives when you're structuring a deal? Because we've both been there when we're, we've been given a brief by our client, we've gone in to go and bat, but-

Andrew Jeffs (18:34.242)
Exactly, exactly that.

Mike Lander (18:55.69)
our counterparty has got a completely different view of the world. And we have to kind of be creative in building different deal structures that meets their agenda and also our client's agenda. How does that kind of work?

Andrew Jeffs (19:10.298)
So yeah, I think Mike, a couple of things. I mean, one is definitely, even if you've gone in with objectives around, for us sometimes we're actually trying to do a deal which is a management buyout. We're trying to help sell a business to a private equity fund where management are gonna go and run that business for the private equity fund with some really good incentives. So you get this moment where actually have the management team.

who work for our client, the seller, are they now really thinking about the next stage of life, which is when they're going to be working for the private equity fund. And I think that can be something which sometimes feel like it's a moment which once it's happened, you can't get it back. But actually being able to maintain for the private equity fund that actually, if you don't deliver the right result for us out of this negotiation, this deal can roll on. So potentially giving them, in that case,

management team fresh incentives, having a reset around time horizon to pursue the main deal. And that's something which completely changes the private equity firm's mindset because they know the deal's not got to just be good enough, it's got to be better for the seller than rolling on to a two or three year run with the same management team. And private equity as buyers want to do deals now because they need to deploy capital now and that's a classic example of

Mike Lander (20:31.011)
Sure.

Andrew Jeffs (20:38.702)
you need to think about what's the objective from their side. It's not about just this deal and just, is this a zero sum game on this deal? It's about putting money to work. So that's one where we've had to have, help our clients have tough conversations with management teams to say, actually, I know we said we were gonna do a deal in 2023, let's actually talk about what that deal could look like in 2025, get them back on the bus. And then all of a sudden, private equity have got to work hard to stretch further.

to get that deal through. So that's kind of an example of making sure that you can kind of have a change in those objectives in terms of some of the stakeholders, I guess. The other thing, Mike, is I guess we've got, you know, two ears, one mouth for a reason. And if you're having the right quality of conversations with the negotiator on the other side, you will pick up.

Mike Lander (21:20.978)
And you just remind... No, go on, carry on.

Andrew Jeffs (21:36.11)
What are the things that are maybe of value to them that you don't care about that much? And being able to deliver things perhaps in a certain timeframe, because they need to be able to show that that's when they've delivered on their side. Those are the kind of things where you can pick up some points to trade that maybe weren't in your original negotiating brief. So, you know, I think never be afraid to extend a conversation, to get a bit chatty, to have a way of actually helping them volunteer what's important to them that maybe wasn't on your brief that you prepared.

in that kind of cold calm moment before going in.

Mike Lander (22:09.55)
Certainly. So, a question we haven't prepared, so we're kind of heading towards the close, but one quick thing that's just kind of come up as I've been thinking about this conversation, relationship versus the content of what you're negotiating. So on one side, you've got the substance of what we're negotiating, the deal structure, and then on the other side, you've got the relationship that lasts after the deal. And obviously in the work that you do, when you're...

Andrew Jeffs (22:31.666)
Thank you.

Mike Lander (22:36.394)
working for a client on the sales side, they're selling their business, there's probably some kind of earn out of some kind probably over a couple of years. So you don't have to live with the relationship issues because you're onto the next deal, but your client is gonna be there for a long time and has to manage that kind of transition over a couple of years maybe. How important is that during a negotiation to maintain good relationships as well as getting the right deal?

Andrew Jeffs (23:07.95)
So I think I think relationships are fundamental to getting to the deal in the first place So I always tell you know the younger guys on my team like don't Don't guillotine a conversation if it gives you a chance to build rapport allow it to run on a bit You know allow that chat around the deal, so I think a key part of what we're doing is building relationships ahead of the deal But you're absolutely right. We're not in the position where we're still going to be going into work a year later

with potentially a change of dynamic because now that party is owning the business or in other negotiations, you're still having to... So we do have a different perspective, but I think actually in a lot of negotiations, you can find someone to play the role that we're playing. So sometimes we need to be the bad guy. We need to actually protect the relationship that our client is going to have with that party after the deal. So there's a bit of a term of art in our world, burn the broker.

So if we're the broker in the deal, you need to send us in. And almost we're the cannon fodder to make that point and make it in the way and have that difficult conversation precisely because we're not around later on. But I think that's a model which you can apply to other negotiations to say, actually, maybe we need someone to come into our negotiating team from Leffield who can deliver this message and then go and not lose the rapport that's being built between the key principles.

Mike Lander (24:07.49)
Ha ha.

Andrew Jeffs (24:34.466)
on an ongoing basis. So I think having that idea of maybe a bit of an impact sub who can do that role is one good way of maintaining the relationship between the core parties. It's sort of what we do in our own day to day.

Mike Lander (24:49.618)
Exactly. So, Andrew, it's been amazing having you as a guest. Just like kind of summing up a couple of things that you'd advise anyone who's negotiating any kind of deal, what should they do?

Andrew Jeffs (24:50.382)
Exactly.

Andrew Jeffs (25:04.326)
So I would definitely say, find that calm space. You know, there's that famous sporting book, The Chimp Paradox. Don't let the fear of losing a deal or the anxiety get in the way of really clear thinking and doing that preparation ahead of time, because that's your moment to be calm. And then the second thing I would say is, rapport counts for a lot. So like I say, don't guillotine a conversation. Allow a chance for the conversation to flow.

partly because it's easier doing business with people you like, but that's your opportunity to pick up on cues that are important to the other side that might not have been part of your negotiating brief and if you pick them up those are the kind of things that you can play around the edges in order to win your key objectives.

Mike Lander (25:50.366)
Andrew, brilliant, what a great summary. So, where can people find out more about you and how can they contact you?

Andrew Jeffs (25:51.003)
and we'll be back.

Andrew Jeffs (25:59.59)
So, Mike, as you'd expect, I'm all over LinkedIn, but I spend my days at a firm called Cavendish, and we're in the city of London, and yeah, spend all our time working with owners of businesses, so yeah, always really happy to have a conversation with someone in that place.

Mike Lander (26:18.27)
Andrew, it's been amazing. Thank you for watching, indeed.

Andrew Jeffs (26:18.918)
I'm good.

Thanks Mike.

Mike Lander (26:24.086)
Right, if you stay there, Andrew, I will stop recording.