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Authentic Deal-Making

A Leap Forward With One Deal

Matt Wavro’s company, Skyline Engineering, has a unique business model that sets it apart from other AEC (Application Engineering Company) firms in New York City. It is an MEP design firm (Mechanical, Electrical, Plumbing) operating in the building construction space, but they have four divisions that cover a full spectrum of services. Matt’s firm can take an entire project from start to finish including the concept phase, design, construction, materials testing, and quality control. It is only possible for them to offer such a wide range of specialties because Matt has done deals and strategic alignments to grow the business inorganically.

The Acquisition of Skyline Engineering

Believe it or not, Matt came across the opportunity to acquire an MEP firm on LinkedIn of all places. At the time, he was doing a lot of third-party inspection work, but his roots were in MEP so it piqued his interest. Every MEP project in New York City requires a special inspection, commissioning, and concrete testing, so Matt realized that there was a huge synergistic opportunity. Since he did not have the necessary capital to purchase Skyline outright, Matt approached the SBA, which helped him with a loan that only required a small down-payment and he negotiated an earn-out for the rest. It enabled Matt to tap into Skyline’s existing talent and client roster, while maintaining the former owners and provide them with a succession opportunity when they were ready to retire. Never assume you can’t get a deal done because you are too small or don’t have the capital – especially with a strategic acquisition, like Matt did, you can get creative and find a way to get the deal done.

Skyline’s Strategic Alliances

Skyline’s acquisition is a perfect example of why you should do these types of deals earlier; you will find there are a lot more options on the table. But the industry is primarily relationship-based. So, Matt formed a valuable strategic alliance as well. MWBE (Minority and Women-Owned Business Enterprises) are given special access to some opportunities, and other times it is even required. By partnering with businesses that meet the MWBE criteria, Matt can acquire new business opportunities he couldn’t access otherwise, and the MWBE businesses benefit as well. Matt’s deals enabled him to acquire Skyline and hit the ground running, so if you are interested in hearing more of the deals he’s done, listen to our podcast episode, Acquisitions and Strategic Alliances in the Design and Construction Industry, with Matt Wavro.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

The Common Pitfalls of Negotiation

Unfortunately, there isn’t a set of magical tactics and countertactics that will make you a legendary dealmaker. Negotiators don’t fail because of a lack of special knowledge regarding tactics and countertactic. They failed for 6 deeper reasons: lack of preparation; ego; fear; rigidity; losing your objectivity, and lack of integrity.

1. Lack of preparation: Eternal preparation: Do you know who is on the other side of the table? Have you researched the company, industry, current market and recent deals? Have you accounted for cultural differences? Internal preparation: Have you done the deep inner work to get clear on why you are doing the deal, what your objectives are and exactly what is acceptable and unacceptable on each material deal-term?

2. Ego: Check your pride at the door, forfeit your need for approval and own your value. Your goal in a negotiation is to meet your objectives; it should never be to win.

3. Fear: Fear creates nervous energy. It causes you to talk too much, listen too little, and concede to terms from a position of weakness. Determine where your fear is coming from and work through your fear before you go into the negotiation.

4. Rigidity: You are at a major disadvantage entering a negotiation with a rigid mentality about price, pace, and timing. Eliminate your preconceived notions and open yourself to new, creative ideas.
Lack of objectivity: You can’t let your emotions control the negotiation. The only time they will serve you is by signalling if something is off. Otherwise your emotions will prevent you from negotiating with a sense of clarity

4. Lack of integrity: If you enter a deal that does not align with your inner truth and moral values, it should be a signal that something is wrong. It doesn’t mean you should walk right away, but you might need time for deliberation or clarification. If it doesn’t feel right, don’t move forward.
If you listened to my last solocast, it is important to note that the top 6 reasons negotiations fail are closely tied to the fundamental framework of negotiation. If you are entering a negotiation with a sense of clarity, detachment, and equilibrium, it will be easier to avoid these pitfalls and meet your objectives. If you are interested in learning more about why negotiations fail and want to hear examples, listen to my podcast episode, The Top 6 Reasons Negotiations Fail, with Corey Kupfer.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

The Ultimate Comeback

Leukemia and bankruptcy are life-altering circumstances—Jeff Holst battled both of them simultaneously. For the average person, it is the ultimate test of strength and character, but Jeff is far from average. He has traveled all over the world, married the girl of his dreams, and he built a thriving law firm by the age of thirty. But when everything seems to be going as planned, adversity is often lurking around the corner. As Napoleon Hill says, adversity is often opportunity in disguise; it is no surprise that Jeff was able to find a silver lining. During his comeback, Jeff made sure he would never be in a vulnerable financial position again. He made sure that he had the freedom to live a fulfilling life and real estate was the answer.

Pick Your Niche and Find Your Stride

Jeff found his stride in the residential multi-family niche, though he has a couple commercial buildings as well. He focuses primarily on the B and C class, low-medium income housing. It is an investment approach focusing on positive cash flow from people who need a place to live and are looking to stay there for a decent chunk of time. Jeff recommends partnering with professional investing in these types of deals to anyone who is looking at real estate as an option for passive cash flow unless, of course, you are interested in owning and managing the buildings yourself which come with dealing with late night tenant calls from Tenants and other headaches. There are a lot of investors and property managers offering small interest in larger deals, which enables you to generate a passive income while delegating the headaches to professional property management companies.

Find the Right Deals

If you decide to invest in real estate, you need to pick a market you truly understand or it’s going to be a monumental struggle. The main challenge now is finding the right properties and the right deals, and figuring out what the current owners are doing wrong. You have to understand the weak points in the current management structure and identify inefficiencies in that market. Most of Jeff’s deals are self-financed, but a lot of the deal structure is based on each individual property. There is a lot of pressure when it comes to dealing with other people’s money; some handle it well and others don’t. But if this is something you are interested in pursuing, my podcast episode with Jeff Holst will provide you with a lot of valuable insights.

Listen to the Fueling Deals podcast episode featuring Jeff Holst’s interview about Financial Strength and Freedom Through Real Estate.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

Get Creative With Your Exit Strategy

Carl Gould built and sold three companies before he transitioned into business coaching. Today, his coaching methodology is shaped by lessons he learned from his own deals. Carl has done deals in marketing and event planning; messenger services; fuel delivery; landscaping; contracting and technology. But his lessons are applicable to any kind of deals on the buy-side or the sell-side.

Get Creative With Your Deal Strategy

When Carl sold his landscaping business, he was able to get a premium for the long-term contracts and relationships he had built. Similarly, his construction company also had monthly recurring revenue and there were more assets to sell. Carl continued to receive a commission for prospects he sent to the new owners because he used his brand as a springboard during the negotiations. Your brand can be leveraged post-closing to add value. Like Carl, you can sell your business and get out of the daily responsibilities you hate, while continuing to do the parts you enjoy and getting paid for it.

Plan Your Exit Strategy in Advance

If you want to be fully-out right away, you are likely to leave a lot of value on the table. This type of deal requires intense preparation and you will benefit by expanding the timeline. This is why Carl has seen such a dramatic shift in the deal landscape today; business owners have realized that they might not get the money they were anticipating and they don’t want to give up their passion. By planning your exit far in advance, you get more options because you’re coming from a position of strength. The same can be said for getting your management team on board. The key is determining how much of the revenue relies on the owner and addressing that as you prepare. Not all profit dollars are created equal.

Listen to the Fueling Deals podcast episode featuring Carl Gould’s interview about how to Get Creative with Your Exit Strategy.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

The Fundamental Framework for Dealmaking

Negotiation is an important part of dealmaking, but it also impacts your business success as a whole. It is something that I cover extensively in my book, Authentic Negotiating, so I wanted to outline my fundamental framework in this episode of Fueling Deals. In thirty-five years of dealmaking, I have seen many tactics and counter-tactics. Some are manipulative and unsophisticated, and others are effective on the margins. But sound tactics will not take your deal across the finish line with the best outcome unless you have clarity, detachment, and equilibrium.

C,D,E

Clarity is the first fundamental principle of authentic negotiation, and it is composed of both an internal and an external body of work. Externally, you need all of the research and due diligence that will put you in a position to understand the party across the table, what the market is like, and what is fair. Internally, you need to do a deep inquiry into exactly what is acceptable to you and what is not. Very few people do the work necessary to get the level of clarity that is necessary for true negotiating success.

Detachment is the second principle, meaning you need to distance yourself emotionally from the outcome of your deal. After you establish clarity and understand each party’s terms, you should be prepared to walk if the deal doesn’t meet yours. It needs to be done from a place of clarity and reason rather than anger and frustration. Many people forget to check their egos at the door, but actively maintaining your detachment will help you rise above that.

Equilibrium is the third fundamental process. Even when you are coming from a place of clarity and detachment, it is possible to be overwhelmed by emotion in a tense negotiation. Your equilibrium will enable you to stay calm and connected to your sense of clarity and detachment. Anything that helps you center yourself in life can be used in a negotiation.

Final Thoughts

By including the fundamental principles of clarity, detachment, and equilibrium in your deal strategies, you will instantly see results. We are going to build on these in future solocasts as well, covering the top six reasons negotiations fail; the five steps to being a negotiator; authentic negotiation techniques; and the principles of CPR. But if you are able to get to clarity, detachment, and equilibrium, you will have an advantage over 90% of other negotiators. If you want to hear more about CDE, listen to my solocast episode, Clarity, Detachment, and Equilibrium, with Corey Kupfer.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Business Relationships Authentic Deal-Making Authentic Negotiating

Leverage Your Intellectual Property

It might be hard to believe, but there was a time when people had to source knowledge without the help of Google and Wikipedia. There was a market for almost every kind of niche information, but there were not enough publishers to meet the demand. Bill Cates stumbled upon an opportunity where he could fill that need and he found himself in the publishing industry almost overnight.

Deals in the Publishing Industry

Bill’s publishing companies produced highly-specified cookbooks and humor books, and he encountered many types of deals while distributing them. Licensing was a major part of Bill’s revenue. He licensed content to cookware manufacturers that wanted marketing collateral for their products. He also paid for branding rights and created product-specific content for the masses. Very few authors take advantage of those types of deals, but it is important to acknowledge that you need to get creative with licensing to reap the benefits.

Licensing offers the greatest payout over time and Bill sees it as a foolproof, sustainable way to protect your nut. Licenses work continually for you, they have zero cost of sale, and they require minimal time. When Bill got out of the publishing industry and became a professional speaker, he put his training video content to work. Today, he is still generating income by licensing that content to different organizations across the country.

Intellectual property is valuable and it is an asset that you don’t want to give away for free. Business models that are built around speakers can fall apart if the speaker is unable to travel or perform. The income Bill sees from content licensing ensures he will live comfortably if anything unfortunate were to happen. It enables him to bring his expertise to clients in a way that is more affordable and accessible. That is why Bill recommends being proactive in leveraging your IP assets.

Summary

No matter what industry or discipline you are in, you have expertise that other people don’t have. There are a lot of ways to get your knowledge out to the masses, but Bill recommends using a combination of strategies that include monetizing your IP. Leveraging what you already have in place is a much more reliable process. It will generate recurring revenue and grow your brand with comparatively minimal effort.

Listen to the Fueling Deals podcast episode featuring Bill Cates’ interview about how to Leverage Your Intellectual Property.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Business Relationships Authentic Deal-Making

The Lower-Middle Market

Gary Kane found a niche in the lower-middle market which tends to be overlooked by a lot of investment banking firms. Chimera Strategies has been thriving in that space since Kane founded it in 2011. Chimera works with businesses between $3M and $25M that are above the business broker line and below the typical investment banking line.

Kane doesn’t approach his prospects as a glorified business broker, but as a simplified investment banker who understands the need for advisory in a revenue range that can’t attract the attention of investment bankers due to the fee structure. A business broker usually follows something similar to a real estate model with listings on a buy-sell website that are marketed passively. The close rate is only around 20% and the deal is usually facilitated by an independent broker with varying motives. Investment bankers work on much fewer deals with higher close rates through controlled auctions and competitive processes and they use active marketing tactics to find a buyer.

Strategic vs. Financial Buyers

In the lower-middle market, Kane primarily works with strategic deals. Larger investment banking firms don’t play in this space as it is difficult to meet the minimum fees, a significant portion of the private equity buyer pool is not interested in the market, financials of selling firms are usually not audited, the business is often not growing and there are no lenders in that space. So that often leaves strategic buyers.

Strategic buyers are ideally in the same or similar industry and geography which allows them to pick up inventory, locations, and people, and 86% of Kane’s deals are done with those criteria.

Financial buyers don’t play in the lower-middle market because of size since it is essentially the same amount of work to do a $5M deal as it is to do a $500M deal. The other problem is that financial buyers are not operators and in the lower-middle market, many of the businesses lack a second layer of management which means that there is no one to run the business when the owner exits.

Terms

Since there are no lenders in the lower-middle market space, almost all of Kane’s terms include 50-60% cash with a balance of a seller’s note and/or an earn-out. An owner’s note is a promise to pay a portion of the purchase price on the back end and an earn-out is a percentage payout contingent on performance over time.

It is a seller’s market right now and buyers want to put their money to work, so with the help of investment bankers like Gary Kane, business owners are cashing out while the times are good. Just because a business is in the lower-middle market does not mean they have to forfeit quality advisory. Chimera Strategies is consistently proving the difference that it can make.

Listen to the Fueling Deals podcast episode featuring Gary Kane’s interview about Strategic Deals in the Lower-Middle Market.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

From High School Dropout to Entrepreneur

At the age of sixteen, Ralph Peterson was told that he was a hands-on learner destined for manual labor, so he quit school and began working in construction. Despite the fact that he always wanted to be a writer, Peterson took these words of “wisdom” to heart and spent eight years on the mud-boots path until he woke up. Peterson always knew that he was capable of doing so much more with his career, but it wasn’t until twenty-four that he decided to finish high school and enroll in college, where he eventually received an associate’s degree in creative writing, a bachelor’s degree in U.S. history, a second bachelor’s degree in business administration, and a master’s degree in organizational leadership.

The Power of a Good Story

Ralph Peterson achieved his dream of becoming a writer, but with all of the accolades aside, he considers himself a teacher before anything else. At its core, Peterson’s role is to teach people in the ancillary departments how to make their processes better, but the ability to monetize his expertise came through an unexpected opportunity during his time as a sales representative.

One of the main reasons that Peterson was driven to become a writer was his passion for storytelling and public speaking, but he only got to employ a half-hearted version of his skill during a thirteen-year career selling housekeeping management systems. The client-facing role provided a means to showcase his skill in the art of speaking, and eventually, he was asked to fill-in for a keynote speaker at a seminar for “housekeeping as a business.” Peterson un-begrudgingly agreed to do the event for free and at the end, he was offered a consultancy opportunity by one of the attendees and his business was born.

Housekeeping in Long-term Care

Peterson deals with two competing business models in the realm of housekeeping and long-term care, but he was able to find a solution that spans both sides. With housekeeping, laundry, maintenance, and dietary, some businesses will come in and take over everything including staff, purchasing, training, oversight, management responsibilities etc. Other businesses choose to opt-out of paying for everything while still providing the management, training, and oversight. Peterson’s niche is right in the middle, where he comes into the same businesses and develops a program for them to follow, then provides oversight of the program moving forward.

Doing Deals as a New Small Business

Initially, Peterson was doing everything himself, but as his client roster grew and the territory expanded, he brought on a Director of Operations for support. The business had limited resources since it was just starting out, but Peterson forged a PTO and benefits package that no one could resist. He prioritized company culture at a very early stage, but he also learned the importance of doing deals internally to increase performance, morale, and employee retention.

On top of increasing his capacity with an additional employee, Peterson is moving a lot of his work to digital platforms so that he can travel less and do more. He hosts webinars with current clients to ensure the success of their new programs, but he is also using technology to bolster a new offering; education and breakdown of nursing home systems and processes. The new product is taking off right now, and 75% of it is done online.

Pay it Forward

Peterson wants to work with clients who are motivated, passionate, and want to get better. It is not about the size of the client so much as their intention since they are both fighting for better care. This includes prospective students for which Peterson is currently building a business model. He is extremely passionate about teaching other adults that there is more to a career than what they currently understand, and he wants to give them the tools to achieve entrepreneurial success in the same industry like he did, regardless of their specialization. Housekeeping used to have a negative connotation for Peterson but now, he understands that it gave him every opportunity and he wants to pay it forward.

You can learn more about Peterson’s story in his episode on Fueling Deals.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

Learn From Your Deals

We have already explored a lot of different ways that you can grow your business inorganically through deals. This time, I want to look at deals on a more personal level. I have done many deals and negotiations for other people as an attorney. But I’ve also done them for myself as a dealmaker. Some have gone well, while others provided great lessons. However, every deal has increased my capability as an entrepreneur, investor, partner and attorney.

Lessons of Early Entrepreneurship

I was familiar with entrepreneurship by the age of fifteen when I started my first business and managed real cashflow. I built a book of accounts and a team of employees, and we distributed flyers and other marketing materials for local businesses. It yielded roughly $300 a week and provided my first lesson in doing deals. The experience didn’t sink in until later. I didn’t recognize the monetary value of the accounts themselves. I didn’t even think about selling them but, instead, just closed the business when I left for college – a lost opportunity and good learning lesson.

In college, I managed to strike a deal with Clare Rose that gave me one of two distributor’s slots for beer kegs on campus. That provided a variety of perks, as I’m sure you can imagine. But in undergrad, law school, and beyond, the enterprise mindset was always present. Whether I purchased equity in small businesses or pursued side projects like real estate, I was always looking for new ways to do deals.

Higher Stakes Deals

With great opportunities, you need to act quickly, and I lost a few of those when I was younger due to a lack of capital. Partnerships can be restrictive, but they can also be a solution. I went into a real estate partnership and raised a fund so we would have money available to be able to act quickly on good deals. However, in real estate deals, everyone is exuberant when things are going well and they run away when a down market hits. We had to pull out of those investments after the investors refused to double down during the recession – another huge opportunity lost.

There are significant challenges for dealmakers of any experience level, but they will always prepare you for the next opportunity. Whether you are doing deals for your business or on the side, there are lessons you can take away from my mistakes and successes alike. Those lessons have led me to a number of deals that have been very successful for me. If you are interested in hearing more about some of the deals I have been apart of, listen to my podcast episode, Growing as a Dealmaker, with Corey Kupfer.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

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Authentic Deal-Making

Corporate Therapy

Dr. Rachel Headley is the type of person who always wants to dive into the next project, and she has never been content in stagnant situations where her skills and processes aren’t being pushed to their limits. That said, entrepreneurship is kind of a double-edged sword. But the type of work Dr. Headley’s company focuses on is in alignment with her need to tackle new challenges regularly.

People-First Solutions in the Workplace

Rose Group International helps people work, by providing companies with organizational efficiency coaching and training to address challenges around teamwork, productivity, time management, and retention. Dr. Headley was inspired after she identified a major disconnect between executives and their employees and knew that there was a solution. With Rose Group International, she examines the organizational deficiencies on a case-by-case basis and tailors a solution that will help her clients achieve their aspirations and transformational goals.

People are the main culprit when a company is experiencing inefficiencies, but it is often addressed by leadership in the wrong way. M&As and other types of deals provide a window into the abyss because productivity usually tanks in these types of deals. Different types of deals have a major impact on the employees because executives generally do not approach them in a way that allows their people to thrive.

Visualizing Employee Traits to Create a Strategy

You can draft the best legal agreement or integration plan in the world, but if the people are unable to work together it is not going to yield the desired results. This is where Headley comes in and her process starts by understanding how the people work. Her first step is to identify the different personality types including fixers, stabilizers, organizers, and independents. Headley assesses all of an organization’s employees so leaders can start to understand who is on their team, who is going to pose a challenge, and the strategies that need to be developed to get different types of employees on board.

Once you understand how people are going to react to change, it enables you to form a strategic plan to roll out your deal to the rest of the organization. It doesn’t have to be utter chaos, and that is why getting Dr. Headley involved sooner than later will only help smooth out the transition. This type of coaching and training is much more effective as a preventative measure than a restorative measure, but it will help either way.

Leverage Your Employees During Periods of Change

Whether it is an internal reorg or restructuring a marketing plan, a lot of CEOs are willing to roll over and accept that it is going to suck for a few years instead of taking the initiative to tackle the problem right away. Dr. Headley and her team come in and help employees adjust to these organizational changes and thrive in ways that you haven’t seen before. If you can get everyone on board with change the effects are powerful because it enables employees to enter an innovation stage, where hesitations are overcome and creativity flourishes. The same change that was a force of destruction becomes an agent of growth, and the company will benefit drastically in the long run.

Dr. Headley developed this assessment to reflect who your people are in a way that is actually relevant to your decision making. The whole point is to problem-solve with your people in a way that no one else does. Change doesn’t have to be hard or take a long time and once you give people a toolkit that works, they will take it and run with it.

Listen to Dr. Headley’s interview in the Fueling Deals episode.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!