Episode 242: The Power of Mindset and Relationship-Building in Dealmaking with Touraj Parang
In the fast-paced world of Silicon Valley dealmaking, Touraj Parang stands as a seasoned veteran with a wealth of experience and expertise. With a career spanning decades, Parang has worn many hats, including those of an entrepreneur, investor, advisor, and M&A expert. Since the late 1990s, he has been deeply involved in structuring and negotiating strategic transactions, making him a true authority in the field.
Not only has Parang been on the entrepreneurial side of the table, but he has also spent almost a decade on the acquirer side as a corporate development executive at Webs and GoDaddy. This unique perspective has given him a comprehensive understanding of the dealmaking process from both sides, making him a sought-after expert in the industry.
ENTREPRENEURS AND DEALMAKERS
In the world of business, there are entrepreneurs and there are deal makers. While both roles involve risk-taking and innovation, entrepreneurship requires a unique mindset focused on building and growing a company. The dealmaker's mindset focuses on creating and seizing opportunities beyond organic growth. Recognizing the utility and benefits of strategic partnerships, acquisitions, and collaborations is crucial to adopting a dealmaker's mindset. By expanding one's perspective, entrepreneurs can harness the power of deals to drive their company's growth and success.
Many companies primarily focus on organic growth, neglecting the immense potential of deal-driven growth, however, successful companies pursue both avenues simultaneously. Whether a company seeks faster growth, a breakthrough scenario, or even protection against market downturns, deal-driven growth can offer unique advantages. By identifying strategic partners, exploring acquisitions, or establishing collaborations, companies can unlock new revenue streams, gain access to complementary products or services, and strengthen their market position.
BUILDING RELATIONSHIPS AND MIND SHARE
There is a critical role of relationship-building in dealmaking. Establishing genuine connections with potential partners and acquirers allows companies to occupy space in their minds and on their horizons.
When decision-makers are aware of a company's offerings and have an existing relationship, the likelihood of them choosing to buy rather than build increases significantly. Furthermore, early engagement enables companies to influence potential buyers' mindset, emphasizing the value and advantages of acquisition over internal development.
THE SPECTRUM OF INTERACTION
There is a spectrum of interaction when it comes to establishing relationships with larger companies. At one end of the spectrum, entrepreneurs can focus on informal relationships by keeping key individuals at bigger companies informed about their progress. This can involve occasional lunches, updates, or periodic meetings to ensure ongoing communication and familiarity.
On the other end of the spectrum, entrepreneurs may identify concrete ways in which their companies can collaborate with larger firms on a product, marketing, or data-sharing level. By proposing strategic alliances that align with both parties' objectives, entrepreneurs can explore the potential for joint projects, co-development, or mutually beneficial initiatives. These collaborative efforts can strengthen partnerships and create opportunities for growth and eventual acquisition.
By exploring the spectrum of interaction and engaging with larger companies in a transparent and open manner, entrepreneurs can forge partnerships that drive growth, increase leverage, and ultimately position their startups for acquisition or other strategic opportunities. Nurturing these relationships and embracing strategic thinking from the outset can significantly enhance the chances of success in the dynamic and competitive business landscape.
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FOR MORE ON TOURAJ PARANG:
https://www.linkedin.com/in/tparang/
Get Touraj Parang’s book Exit Path: How to Win the Startup End Game
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. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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