effective agreements services

© 2011 Effective Agreements, Inc.. All rights reserved 1

Effective AgreementsSummary PresentationSBA Networking Group

December 5, 2011


Agenda

Who is this guy? (General Background)

Poor Agreement Processes An Element of Risk Effective Agreements’ Solutions Mergers and Acquisitions Summary


General Background Information President and Founder of Effective Agreements V. P., Corporate Business Development, DSC

Communications Corporation ($1.4 billion company) Ran the M&A Group for twelve years Over $500 million of transactions on the buy- and

sell-side Strategic alliances and other major agreements

V.P., Business Development, TelOptica Software start-up Raised $15.2M in venture capital

Eleven years helping small- and medium-sized businesses improve their business agreements

Poor Agreement Processes

Frequent Causes and Results


The Wrong Person in Charge No full time, experienced contract

person on board Managing the process falls to:

The senior management team Often the CFO

Subject matter expert Neither may have expertise in contracts

Person in charge may be “in love” with the deal

Executives may feel that they can negotiate unprepared – from “their gut”


Results

Management or subject matter expert becomes the “choke point” in the agreement process Backlog builds up

Seen 40 agreements Loss of focus on the core business

Person in charge over-extended “Day job” conflicts with completing the

negotiation and vice versa Unprepared negotiator always loses Leader in love with the deal may push it

through


Results (Cont.)

Process takes longer Experience counts

Attorneys receive documents where the business deal is hazy – and bill for getting up to speed

Some deals may not be accomplished


Suspect Templates What is actually the genesis of

most agreement templates used by small companies?

Template agreements are brought over by an executive from a previous company Often from another kind of business

entirely Software versus hardware


Results Key: agreements have been previously

negotiated Template’s terms reflect concessions that

were made in return for something of equal value

Those points are ceded without receiving anything in return when the template is used

Management is not trained to modify an old agreement for a new situation


Other Results of a Poor Process Small companies fail to be aggressive

enough when dealing with larger companies Fear being seen as “hard to work with” Will actually be perceived as “business

savvy” Lack proper negotiating team and

assignments One to negotiate One to take notes One to listen

Take on unnecessary risk and potential costs


A Matter of Risk

All of the poor agreement processes above introduce unnecessary risk into your Client

Client may needlessly accept onerous terms that threaten its very survival

Distraction of management from the core business is inherently risky

Effective Agreements

Solutions


Effective Agreements’ Method Begin with a blank flip chart Use outlines to prevent omissions Apply our experience to negotiate

a realistic arrangement that will work for both parties

We do the drafting of the agreement

Successful in major international relationships

Have had other side agree to pick up 1/2 our fee


Where Templates Are Needed Original drafting or modifications Avoid errors of omission “Key employees” who live with the relationship day-

to-day are included Accounting, marketing, maintenance, etc.

We help avoid: Duties the company cannot perform Sales channel conflict Revenue recognition questions

Work with management and their attorneys to develop solid but adaptable agreement templates


On the Receiving End Other side insists on using its agreement or

marks up client’s draft Effective Agreements prepares a response

Provides management with a memo on the changes made

Legal issues are highlighted for involvement of attorneys

We can negotiate for the client if asked Management and attorneys are always informed

and consulted on important issues


Additional Value Added Where client needs to hold the line on a point,

Effective Agreements can be the “bad guy” We handle the logistics of circulating drafts to

push the agreement to conclusion Client stays focused on the core business Very fast turn-around times on drafts – hours

rather than days Attorney receives a draft with complete

business sections that are crystal clear May review business section, but do not have to

draft from scratch

Mergers and Acquisitions

Techniques proven by $500M of transactions


Sell-Side Create superior data rooms – physical

or virtual (VDR) Knowledge of several VDR products

Supervise buyer’s due diligence See that the management team has

time to run the business, protecting the asset

Aid with definitive agreements, including negotiation


Buy side

Preliminary analysis of seller’s data room Supervise the entire due diligence process Protect the asset from damage caused by

the process Buyer’s management stays focused:

Strategic acquisition issues Transition planning!

Aid with definitive agreements, including negotiation


In Summary

Effective Agreements: Breaks up the backlog of agreements

Speeding transaction process Faster turnaround

Improves agreement templates Reduced business risk, resulting from our

experience Leaves Client management free to

concentrate on the core business

Contact Information

Tom PhillipsEffective Agreements, Inc.972.235.7656 (Office)214.549.1770 (Cell)tphillips@effectiveagreements.comwww.effectiveagreements.comwww.linkedin.com/in/tomphill

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