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How to Hunt Elephant Deals Like Buffett

How long does it take to pitch a $26.5 billion deal? About a day, if you are ready.

If Warren Buffett decides to strike, he doesn’t strike with half measures. When Buffett chose to make an elephant-sized railroad deal, he did not hesitate. That’s why in 2009 a man worth about $44 billion was willing to spend $26.5 billion to acquire the 77.5 percent of Burlington Northern Santa Fe that he did not already own. We were told by a BNSF executive that Buffett brought up the jumbo deal idea to the CEO just one day before the board meeting.

The next year Warren Buffett said he had almost $40 billion more to spend. The “elephant gun is reloaded, and my trigger finger is itchy” he said in his annual letter to shareholders.

But was the BNSF deal just peanuts for Buffett? Actually it was an all-in bet during a fearful time for the economy. In the BNSF boardroom Buffett must have done an excellent job of taking fear off the table. In our book “How to Close a Deal Like Warren Buffett” we discuss how important it is to remove fear from the mind of prospects.

One of the biggest fears prospects usually have is a quite simple question:  “How do we get started?”  They’re now poised at the end of a cliff and a deep chasm.  They can see the other side and implementation of your solution.  But between now and then is a huge chasm they cannot cross in their imagination. 

Posted by admin in Forbes.com, Sales Strategy.

Triple Your Chances of Getting to Dealmakers Like Buffett

“My dream buyer for the family business all along was Warren Buffett,” said Barnett Helzberg, the owner-manager of Helzberg’s Diamond shops.  “I knew we could trust him to keep the headquarters in Kansas City, resist changing the company’s character, and retain the jobs of all of Helzberg’s associates. It might have been simpler to sell to the highest bidder, but that notion seemed as sensible as choosing a brain surgeon based on the lowest price rather than on talent and reputation.”

Now Buffett loves jewelry. Not to wear, but to own as a business. Without a doubt this was in the back of Helzberg’s mind when he bumped into Buffett in New York City.

“As I walked past the Plaza Hotel near 58th Street and Fifth Avenue on a glorious May morning in 1994, I heard someone call out, ‘Warren Buffett!’” recalled Helzberg, who didn’t squander the chance encounter.

As busy New Yorkers rushed past, Helzberg told the greatest dealmaker in the world why he should make a deal for his family’s 79-year-old jewelry business.  “I believe that our company matches your criteria for investment,” Helzberg said.

To which Buffett replied, simply, “Send me the information. It will be confidential.” Before long the deal was done.

Triple Your Chances of Finding a Deal Champion

Helzberg was able to go straight to the top. However, in our book “How to Close a Deal Like Warren Buffett” we discuss that it helps to have a champion on the inside. Recruiting a champion is not difficult, although it may seem that way at times. 

Posted by admin in Business Strategy, Forbes.com, Prospecting.

Martha Stewart’s Brush with Death: Plan for Resurrecting a Brand

“I’m a very healthy, useful, energetic person thriving on very little sleep,” the 71-year-old domestic diva told the Wall Street Journal, which commented she has little interest in discussing succession plans. “I’m not dying yet.”

But where is the empire going now that “The Martha Stewart Show,” the daily TV program, is no longer on the Hallmark Channel and the September issue of Martha Stewart Living, the magazine, according to Media Industry newsletter, has almost 40 percent fewer ad pages than last year?

Stewart, who became famous writing books on entertaining, has always been a dealmaker. She bought back the rights to her magazine, show and books in 1997. In 1999 she took her company public, becoming an overnight billionaire.

However, the IPO prospectus did note that the business would suffer if Stewart’s “public image or reputation were to be tarnished.” In literature, that’s called foreshadowing. Magazine advertisers fled and her syndicated TV show was canceled when a Stewart stock sale led to an obstruction-of-justice conviction and a prison sentence.

Make Deals to Evolve the Brand

Evolving a brand is different than growing a brand. To evolve a brand you need to find new affiliations to update the brand message. Here are three ways.

1. Find New Partners. Making deals to breathe life into the brand is essential. During her fall and comeback the company’s main focus was making merchandising deals. There were Martha Stewart accessories for PetSmart, and retail partnerships that included Home Depot, Macy’s, Michaels Stores, and J.C.

Posted by admin in Business Strategy, Forbes.com, Prospecting.

Disney and Star Wars: Doing Deals at Light Speed

It would be easy to assume that the nine zeroes in the price for the purchase of Lucasfilm by Disney made the deal move faster…that would be the wrong assumption. Offer prices may get deals done, but they don’t get them done faster.  Speed to the deal is set by something beyond the money.

When The Walt Disney Company (NYSE: DIS) did the $4.05 billion deal to obtain Lucasfilm, they were following a pattern that had brought into the fold proven franchises like Marvel, Pixar and The Muppets. The family portrait now includes Mickey Mouse, Luke Skywalker, Iron Man, Buzz Lightyear and Kermit the Frog.

In addition to cash, the sale by the 68-year-old Lucas to Disney assures a good home for his creation. For the galaxy of Star Wars fans, expect a new film to join the franchise in 2015. Money was only a part of the motivator for Lucas (already a billionaire) for selling his company. Lucas gets a steward for his iconic property and the world’s strongest distribution channel and merchandising partner for like properties.

Disney obviously goes for what it wants, but how do you know if the deal is the right one for you?  In our book “How to Close a Deal Like Warren Buffett,” we state that every dealmaker has to decide on his or her own criteria. Buffett publishes his in his annual “Letter from the Chairman” in the Berkshire Hathaway Annual Report. Clarity is one of the keys to closing deals faster.

Posted by admin in Forbes.com, Sales Strategy.

4 Ways Buffett Overcomes Deal Bumps

“The roads of business are riddled with potholes; a plan that requires dodging them all is a plan for disaster,” says Warren Buffett.

A case in point that we discuss in our new book, “How to Close a Deal Like Warren Buffett” (www.closelikebuffett), happened in 2003. Thanks to a tip from some MBA students that visited him, Buffett acquired the manufactured housing company Clayton Homes for $1.7 billion (or $12.50 per share). The numbers were great. Clayton operated 32 manufacturing plants in 12 states, and its homes were marketed in 48 states through a network of 1,540 retailers, 391 of which were company-owned sales centers.

But the deal was not as smooth as aluminum siding, and Buffett had to work hard to clear the deal path. The deal quickly led to shareholder litigation that alleged “self-dealing, abusive control and lack of candor.” Despite the fact that the manufactured home industry was in one of the worst slumps in decades and Buffett’s acquisition price was 12.3 percent higher than the Clayton Homes share price at the time, there were still issues.

Perhaps Buffett’s reputation for value investing was the reason behind the shareholders’ hand-wringing. One opponent said that the fact that Buffett had made an offer was proof enough that it was a low-ball bid.

Buffett went to work winning over a shareholder vote. The Clayton Homes deal eventually received shareholder approval, but by a slim margin of 52.3 percent.

Create Tools to Clear the Deal Path

Buffett is by no means the only person who has had to face resistance to a new and truly beneficial deal.

Posted by admin in Forbes.com, Sales Skills.

4 Ways to Follow Buffett’s Big Bets

In another sign that he thinks the U.S. housing market is recovering, Warren Buffett’s Berkshire Hathaway (NYSE:BRK) announced on October 30 that it is buying the real estate brands Prudential and Real Living. The combined networks of more than 53,000 Prudential Real Estate and Real Living Real Estate agents generated in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.

Here is an ugly truth about deal making. When you are looking for a deal, don’t just look at the pretty partners. You should be looking at the ugly too to see if there is an opportunity.

For years the U.S. housing market has been pretty ugly. While the 2008 housing bubble was unexpected, Warren Buffett stated in early 2012 that you can still expect couples to want to form families. “That devastating supply/demand equation is now reversed: Every day we are creating more households than housing units. People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up’ may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure.”

A theme we highlight in our book, “How to Close a Deal Like Warren Buffett” (www.closelikebuffett.com), is that the man is opportunistic. He won’t make deals just to make deals, but when he is out to make a deal he knows exactly what he wants. He also tends to make deals in clusters: housing and construction, insurance companies, furniture retailers, candies and confections, shoes and footwear, jewelry, and so on.

Posted by admin in Business Strategy, Forbes.com, Sales Strategy.

3 Ingredients to Making a Warren Buffett Deal

Trains, planes and…cooking utensils? How did Warren Buffett, owner of companies like BNSF Railroad and NetJets get into home parties that sell cooking gear? It started with one of the key techniques of sales; speaking in the buyer’s language. If you want to sell a deal like Warren or to Warren, it is critical you speak in the buyer’s language.

As we explain in chapter five of our new book, How to Close A Deal Like Warren Buffett, you can’t land your next Warren Buffett big deal by selling to the same types of people in the same size companies at the same level of organizational authority, speaking the same sales language.  You’ve already gotten as much out of that approach as you can.  Your prospect is higher up the food chain and has a different problem. You have to think like that prospect thinks if you’re going to cook up a Warren Buffett kind of deal.

Doris Christopher, the founder of The Pampered Chef™ never dreamt that borrowing $3,000 on a life insurance policy would lead to her making a mega deal with Warren Buffett and Berkshire Hathaway (BRKA).

In 1980 Christopher was 34 when she began looking for a way to earn money while staying at home with her daughters. She was an avid entertainer and her friends often asked about her kitchen gadgets. Trained as a home economist at the University of Illinois, she knew how to discover the best kitchen tools.

Selling utensils sounded good, but how? 

Posted by admin in Business Strategy, Forbes.com, Leadership.

Netflix Needs to Get Mean and Mean It

Can Netflix make the necessary deals it needs to fight and retain the crown in video-streaming media, the field it pioneered? There are many contenders, and maybe a few pretenders, for the throne. Google, Amazon, iTunes, Hulu and Verizon are all rivals that are ready and capable to wheel and deal.

Writing in BusinessWeek, film critic Roger Ebert last year said that Netflix CEO Reed Hasting’s pricing revamp was clumsily handled, but he gave it a big thumbs up as the right move.

“Yet Hasting’s decision, I believe, was inevitable and realistic,” wrote Ebert. “Video streaming represents the future of Movies on Demand. It’s instantaneous, the overhead is lower, and continuing to mail DVDs is a marketing and distribution approach as obsolete as book rental libraries, the tented circus – or snail mail.”

Netflix has lost its first-mover advantage and is looking less than nimble in negotiations. The market is hot and each of its competitors is making content deals that eat away at Netflix’ uniqueness. Bungled deals with Starz and Warner Bros. that left it with no deals or weak deals have put Netflix in a long-range weakened position.

Sorry Netflix, but the pioneering days of the cheap and easy video streaming deals are done. Heavy is the head that wears the crown. You have a fight on your hands.

Deal Making When the Going Gets Tough

Are you facing motivated rivals in your deal making? Then know this: you are in for a fight. If you and your team are ready for a fight then you have some potential bad mojo.

Posted by admin in Business Strategy, Forbes.com, Leadership, Sales Strategy.

The Roadmap for Facebook Reputation Recovery

Since the May IPO, the stock price of Facebook has been on a bumpy ride. What should a dealmaker do when they are on the comeback trail? The one certain part of business is sometimes you will be up and sometimes you will be down. What you do to rebound from the down makes all the difference.

The Talking Points

Facebook may have taken some lumps, but the social media champ has passed the 1 billion-user mark. You have to like that as an advertiser because that is more potential consumers than the combined population of the United States, Russia, Japan, Brazil and Pakistan.

“The primary way we are monetizing Facebook is through advertising,” says Chris Cox, vice president of product for Facebook. “Providing a free service for 1 billion people represents a great amount of costs. The advertising model has always been the primary financial model for a content publisher.”

To put that advertising opportunity into perspective, one of Cox’s fellow VP’s at Facebook says it is like five simultaneous Super Bowls happening every day.

Cox has been with the company since 2005 when there were fewer than 100 employees. Once Facebook’s chief HR officer and still the person every new hire meets on their first day of work for an introduction to corporate culture, Cox is rapidly becoming the second face of Facebook.

Cox has been given the mandate to make big bets in mobile and is looking to make deals.

“The projection is 4 billion people will have smartphones by 2017,” said Cox at an October forum presented by The Atlantic magazine and University of California San Diego Extension (where Henry works as the assistant dean).

Posted by admin in Business Strategy, Forbes.com, Leadership.

When You Need to Land A Dream Deal

The 787 Dreamliner is the biggest innovation in commercial aviation since the Boeing 707 introduced the world to passenger jet travel more than 50 years ago. Thirty-five percent of the major structural components are sourced in Japan, and All Nippon Airways was responsible for many ideas incorporated into the plane. ANA and Boeing celebrated the delivery of the first 787 Dreamliner in September of 2011. Since then, Boeing has delivered 25 Dreamliners to six different customers.

The dream gets better. A year after the delivery of the first 787, Boeing and ANA announced in September of 2012 that the ANA Group has ordered an additional 11 Dreamliners. The order, valued at $2.7 billion at current list prices, bring the total number of 787s ANA has ordered to 66 airplanes.

Also this September United became the first American airline to get the new plane from Boeing. Made from composite materials, the 787 is the first mid-size airplane capable of flying long-range routes. That means new, non-stop routes preferred by air travelers. The Dreamliners can carry 250-290 passengers on routes of 8,000 to 8,500 nautical miles. The airplane uses 20 percent less fuel than today’s similarly sized airplanes. It travels at a speed of Mach 0.85, which is similar to the speed of other Boeing twin-aisle airplanes.

“It’s not often that we have the chance to make history, do something big and bold that will change the world in untold ways and endure long after we are gone,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes, back  in 2011.

Posted by admin in Forbes.com, Sales Strategy.