Vetting Deals

Once you’ve started nurturing your relational network, something miraculous will happen. One day, while visiting Dubai a friend called me and said he had a product for sale and asked if I knew any buyers. I had to admit that I did not but I would keep my eyes open. I was very busy the next two days when suddenly I received a call from another friend asking me if I knew anyone selling the product the other friend had called me about two days prior. A connection was made and a handshake deal was consummated a few days later. That is the miracle….deals find you!

When this happens, you have an entirely different problem: vetting deals. I can’t respond to every deal I get approached with these days. I didn’t even have the time to work on the above deal. Since I knew the product and both parties, there wasn’t much to vet. But there are a lot of times that is not the case.

I’ve been involved in too many deals to count over the past 30 years. They span nearly every sector and continent. When someone brought the first LNG (Liquid Natural Gas) deal to me, I had zero knowledge of the field. So I had to study, learn and ask a lot of questions from my friends who were experts in the field. That is a part of vetting a deal. You have to understand how that specific industry works. What works with medical supplies does not work with LNG, for instance.

LNG has a very interesting protocol and I even had to learn about the ships that are specially made to transport it, how it is converted for transport then converted back, and how the financials work. I also needed to learn who was trustworthy in this space and who was not. I didn’t know the buyers very well, but they came highly recommended. That meant I had to do some background on them, and get validation of their authority. There are a number of metrics you need to learn to vet a deal. I spent the time learning this industry because contracts are usually for several years with consistent monthly payouts. It’s a very good investment of my time. But I wouldn’t do that for some other fields I have been approached with.

Here is the bottom line. You need to reasonably assess if a field is worth your time or not, and the faster you can do that the better. Here is a short list of things for you to consider.

1. Is this space worth the investment of your time? Every field is different, and you need to ensure to filter between the hype of others who have personal motivation to get you involved. Be objective and stick with facts.
2. Are the people involved worth the investment of your time? Do they have a solid reputation both in and out of this space? Once again, you might want to have a drink with them but the real question is, can you trust them enough to invest time you will never recover.
3. What sort of commitment will it require of you? Is this a 90 day commitment or a 12 month comittment, how many hours a week and what do you realistically have available? Remember, it always takes longer than you think so consider that when evaluating.