Buzz Archive:
Deal Terms and Their Impact on Returns

by Justin Byers, Business Intelligence Analyst, 10/8/2009

As we have been demonstrating our new Portfolio Analysis Tool over the past couple of months, we have run into people from all sides of the business that have never really taken notice on how just one or two slight changes to the Deal Terms could effect their return. When it comes to negotiating a deal, both sides of the table are weighing the risks for the greatest return. We have heard some say that they did not take on funding due to they could not come to an agreement on the valuation. What if you could tweak one or two terms in the offer and keep the valuation, but still accomplish what you are trying to do? At the end of the day, everyone could go home happy…at least for now. The Deal Terms are what determine who gets what and how much. Just because you are putting in enough to gain a certain percentage of the company doesn’t necessarily mean that your return will reflect the same. What about all of the preferences (if any) that are in front of you? Using our new Portfolio Analysis Tool, we are able to show a small example of what tweaking terms might look like. This is old news to many, but it helps to get a refresher every now and then, and seeing this in a graphical representation helps bring a new light on things.