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![Page 1: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/1.jpg)
Preparation for NegotiationPreparation for NegotiationPreparation for NegotiationPreparation for Negotiation
National Research Council - February 14, 2001
Presented by:
Marcus Brady, Vice President Corporate Development Neurochem Inc.
![Page 2: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/2.jpg)
TopicsTopics
• Getting Started.. Begin with the end
• Objectives and decisionmaking
• Deciding what information to get
• Sources of information
• What to do with it now that I have it
• Getting Started.. Begin with the end
• Objectives and decisionmaking
• Deciding what information to get
• Sources of information
• What to do with it now that I have it
![Page 3: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/3.jpg)
Opportunity Favours the Prepared Mind
![Page 4: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/4.jpg)
…bring the Pieces of thePuzzle Together to Reduce Uncertainty
…bring the Pieces of thePuzzle Together to Reduce Uncertainty
Patients
CompetitorsFuture Events
Fit??Fit??
![Page 5: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/5.jpg)
Getting Started…Begin With the EndGetting Started…
Begin With the End• Decide on the objectives & information
requirements• Who is your client, what decisions must
be made• Packaging the results:
– information a model ongoing resource/system
– presenting the findings
![Page 6: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/6.jpg)
Decide Early on Your Objectives
• Assist in meeting strategic objectives– Find/value /dispense with a product(s)– Prepare for forthcoming negotiation
• What do I need to make/influence the decision
• How will the information be used/ presented & by whom
![Page 7: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/7.jpg)
Potential Objectives
• Securing a new product/technology• Enhancing competitive position • Potential benefits
– Brand name– Block out competition– Revenue – Pipeline
In any event, the qualitative and quantitative evaluation of product value must be determined
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What Information Do I Need?
• Analytical due diligence
• Confirmatory due diligence
• Key data may include– Potential new products, partners– Insight on the other negotiators– Info on traditional deal structures – Value of product
• sales, competitors• technology, performance
![Page 9: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/9.jpg)
Taking Stock of Your Resources
Internal• Budget• Scientific and
business reports, conference proceedings
• Staff, Employees• Time• Head office
External• CHLA & other
networks• Subscriptions,
databases, studies• Grants• Web• Consultants, lawyers• Interviews
![Page 10: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/10.jpg)
Setting the Stage for Research
• Understanding your negotiation position and that of your client/partner
• Laying a solid foundation for the desired end result
• Packaging the info• Deciding when you
have enough• Preparation,
Preparation, Preparation
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What does it take to get the answers?
• Double the time and increase the units– 2 hour estimate = 40 hour reality
• Always have three alternatives
• Plan for success & for failure
![Page 12: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/12.jpg)
Let Your Priorities Guide the Information You Gather
• Time sensitivity of decision, negotiation, information needs
• Price
• Inter-company synergy
• Competitive advantage in negotiation
• Product: stage, size of market, risk, therapeutic area, market movement, fit of product in the marketplace
![Page 13: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/13.jpg)
Gather Internal Information Needs First
• Pipeline analysis– Revenue analysis
• Time available• Criteria for
selecting product– Funds available– Product searches– Hurdle rate
• Define internal capabilities & resources
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Qualify Both Internal & External Information Needs• Short & long term objectives
• Identifying & qualifying alternatives and Critical Success Factors
• Short & long term corporate & product SWOT
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Pipeline AnalysisPipeline Analysis
• Objective - Bring the highest potential products to market fast.
• Determine product potential through model building.– Where do you want to be?– Where are you going?– How can we get there faster?– Are resources in line with direction?
• Objective - Bring the highest potential products to market fast.
• Determine product potential through model building.– Where do you want to be?– Where are you going?– How can we get there faster?– Are resources in line with direction?
![Page 16: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/16.jpg)
Lacking Search Criteria
• The product should be– Stage– Medical or market
performance– Patent status
• Product holding company should be– Stage– Experience– Product mix
Decide early how much information you want out there about your needs
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An Example: Late Stage CNS Product for Canadian MarketStage Dbase Consultant NetworkDiscovery
Preclinical
PI
PII
PIII
Launched The earlier the product the moredetective work you will need to do
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Risk : Reward on Information Sources
Source Accuracy Time CostWeb Variable +
ProfessionalNetwork
Good +
In house Good +
Consultants Variable -
Databases Variable +
Track people from your target company to companies with which you are affiliated
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Costly Reports and Low Cost Alternatives
Costly (My order of Q)• Scrip PJB• Windhover• Connect• DR Reports• TMG• SRI• D&MD• D&B• Theta
Relatively Cheap • Federal Government• Economic development
offices• Disease associations• Clinical experts• In Vivo/ Biocentury• Tech. Transfer
Conference & AUTM• Attlas Directory
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Other Useful Internet Resources
• Company home pages• SEC’s EDGAR Database (sec.gov, edgar.online.com)
• Mailing Lists and Newsgroups (Dejanews.com)• Analyst reports (stockinfo.standardpoor.com, moodys.com,
dbisna.com)
• Research Databases (Dow Jones, Reuters, Knight-Ridder)
• News delivery (pointcast, excite, biospace, newspage, yahoo, Nasdaq)
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Web Sites of Considerable Utility
Site Financial Sales GossipCompany
Medical
Web resources
Edgar Online
Biospace
Recap
Analysts
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Efficient use of Consultants
• Define roles and responsabilities– finding products– pricing / valuing the product– preparing negotiation position, market
evaluation….strategy– participation in negotiation
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Steps in Due Diligence
• Set up due diligence team
• Size and fit of counterparty/technology
• Financial potential
• Intangible assets
• Validity of dossier
• Quality transactional elements
• Last minute probles
![Page 24: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/24.jpg)
Often Overlooked Pieces of Your Network
• Government (Labs, Industry Canada, Regulatory Bodies & foreign equivalents)
• Legal and accounting counsel• In house recruits• CHLA & Industry associations• Venture capitalists
Take a minute and reflect. Buy a contact manager.
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Setting the Network Size in Proportion to Risk
Enlarge It• Secrecy lost• Less control over
message• Increased
opportunities• Too much
information • Inventors galore
Contract It• Too few
opportunities- too late
• Late stage products• Secrecy
maintained?
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Try to Use Company Resources & Head Office
• Develop & maintain your network early (Marketing, HR, Sales, Clinical, R&D)
• What info. really makes a difference
• Selling to management- – Knowing what they really want & sell that
back to them– Research the social styles, buying
influences and objectives of internal market
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Maintaining Credibility with Targets
• Knowing your own firm and its weaknesses
• Ask. Yes Ask.
• Focus on the product not on the price
• Know competing products and their strengths & weaknesses
• Be prepared to back up “Shadows on the wall”
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Serial Contacts-Definitely Contact Multiple Companies
• Put your needs and expectations on the table
• Research internal alternatives both standard and creative
• Ensure proper mix of benefit, price, time to market
• Always develop a plan B
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Target Company Package & How to Evaluate it
Set Criteria First ConsutationInternal External
Valuation
Market & salesdata
Science
Risk
Intellectualproperty
Regulatory review
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Quantitate Financial Potential
• Revenue potential• Gross margin potential• Operating margin potential• Type of deal to target• Development costs (of technology/product)• Fields of use• To swap or not to swap
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RevisionsRevisions
$36.3 Million
$100 Million
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What to Do With The Info Now That I Have It
• Reports
• Models
• Lists
• Negotiating strategy
• Timing of decision
• Team evaluation
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Plan for Problems
• Overbidding
• Technology or patent problems
• Accounting policies & irregularities
• Foreign currency considerations
• Regulatory issues
• Ownership structure & corporate culture
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Reporting Structure & Impact on Internal Marketing
• Corporate Needs– Funds– Sales– Recognition– R&D funds– Equity– Timing of deal– Partner and PR
• Social styles of all involved– Considerate– Direct– Spirited– Analytical
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Crisis-Time is Gone, Information is Incomplete
• Establish criteria for completion early
• Plan ahead for this contingency– consultants, additional staff– time, money, pre-approvals– get essential information first & its costs
• What can be done– Stall– Re-evaluate your needs & risks
Information is always incomplete
![Page 36: Preparation for Negotiation National Research Council - February 14, 2001 Presented by: Marcus Brady, Vice President Corporate Development Neurochem Inc.](https://reader030.fdocuments.net/reader030/viewer/2022032707/56649e3f5503460f94b2f3e3/html5/thumbnails/36.jpg)
Caveats
• Encourage your partner to perform this exercise too
• This must be an ongoing activity
• Use your network. Let your hair down.
• Get a PIM/Contact Manager
• Avoid a commission, but ensure that you leave enough time to do the job.
Did I mention preparation and practice