Structuring Deals

Question 1

What are the main steps of structuring the deal process?

Answer 1

1. Pitching
2. Screening
3. Syndicating
4. Negotiating
5. Closing

Question 2

What are the main reasons to syndicate deals?

Answer 2

• Diversify portfolio
• being able to make more investments and still be active in the company.
• complementing experience
• part of a networking strategy
• easier access to future funding resources

Early stage deals are syndicated less often.
Later stage deals, most of the time.

Question 3

What is the structure of syndicates?

Answer 3

One leader (deal sourcer or the one investing the most) + followers.
Leader performs due diligence, manages the negotiation and takes board seat at the company.
Compensated by preferential terms.

Question 4

What is Nash’s bargaining solution?

Answer 4

Deal depends on four key parameters:

1. Outside option one party
2. Outside option other party
3. Joint value achieved by cooperating
4. Bargaining strengths of both parties

Question 5

What are the important aspects in the negotiation process?

Answer 5

1. Outside options
2. Zone of possible agreement ZOPA
3. Final agreement