No matter how well a business deal is proceeding, negotiations and best-laid plans can always take a left turn, leaving the deal dead, or trapping you in a nightmarish contract. Coco Soodek, a business law attorney at international law firm Bryan Cave LLP and author of the ebook â€œBirth to Buyout: Law for the Life Cycle of Your Business,â€ says most scuttled business deals likely had some early warning signs. She says problems can be avoided if entrepreneurs and small business owners heed her five signs:
- The other guy talks and talks, and you understand every 37th sentence. Nobody should invest in a new venture if they canâ€™t clearly understand how it works. When a potential business partner talks too much, or makes no sense, reconsider getting involved.
- Your potential partner starts acting like an adversary. If a potential partner refuses to be fair or reasonable before your relationship starts, imagine how much worse itâ€™ll be when youâ€™re locked into a contract. A red flag: non-compete clauses that restrict your ability to work elsewhere if the deal goes south. Donâ€™t sign one of those.
- â€œDonâ€™t you trust me?â€ If he has to ask that, then you shouldnâ€™t. Also: â€œI only do business on a handshake.â€ That guy always turns out to be bad news.
- â€œThese are the contracts. Sign here, here and here.â€ Contracts donâ€™t always say what the signees think they do. People who write them make errors. Insist on a review with your lawyer, and insist that the other party does the same.
- You get close to contract; he starts to hedge. Sometimes the efforts involved in doing a deal sap a company of its energy. Youâ€™d be surprised how many Closing Dinners are followed by Requests to Renegotiate.
Photo by omgayeo.
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