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. This, of course, makes them very afraid. You have to help them cross the chasm of change.
Building for them a bridge across will eliminate that gigantic fear and show them your competence, your ability to anticipate and strategize, and your willingness to share a little of the load of transition.
What the prospects want to know is “What happens between now and then?” And you have to be prepared to answer completely and with confidence.
“Trust us. It’ll be done,” won’t eliminate any fear.
Transition Maps Reduce Fear
What you need to create is a transition map. Here are the elements:
1. Start with the question: What will we do today or tomorrow to move this forward? And you take it from there.
2. Name and define clearly each step you will take between now and full implementation. Think of everything. Nothing is too trivial to be included.
- Actions to be taken
- People to be involved from both companies
- Training that will be needed
- Person(s) from your company responsible for each step
- Timeline for each step
- Individual to contact in case prospect has questions
3. Set a regular communication schedule with the prospects to keep them fully informed.
4. Establish milestones with key performance indicators where you and the prospects can discuss how everything is going. Define your results threshold for rollout upfront. At each step, what results do you need and what results do your prospects need to make, so that you can move seamlessly through the steps?
5. Establish the 30 percent completion point, the 50 percent completion point, and so on.
6. Establish an ROI schedule that can be used to evaluate the deal.
This transition map is essential when you’re hunting your elephant-size deals. Because this is such a large deal and since prospects are likely fearful, sometimes they will say, “Let’s try a little and see how that works.” Don’t fall into that trap. When you are going to eat an elephant don’t nibble; jump in and get the deal done.