It is well within a business owner’s right to have bare-knuckled negotiations on every detail in a deal, just be cognizant of what that will do on slowing a deal down and the way those involved might feel in terms of working together going forward.
Almost everytime I come across that it’s a sign of cold feet or lack of dedication to getting it done. I approach it as you only get one ask so use it carefully and prepare to defend it no matter what and even better be prepared to offer up something in response to the ask. Never assume you are entitled to a deviation from the baseline even when the baseline was perhaps unreasonably established. Sometimes too you just need to bear hug the deal and deflect to keep the attention where it matters. Get it done.
Good points Jeff Gerstner & it also helps when the lender can explain why the particular covenants & BBC formulas being proposed as part of the deal structure/capital stack are beneficial to all parties long term... including the client. It aways helps my CXOs when I give them the added context & insight on why the formulas I'd offer are like hazzard lights for their operation - by tracking the proper KPIs unique to their industry and its stated objectives for the corporate entity, stockholders, shareholders & stakeholders; considering short- and long-term objectives. Open conversation from the onset is key to a long standing business relationship - always happy to discuss "sticking points" to ensure [we] do not cut corners that will likely hurt the business operation long term if important details are overlooked for sake of avoiding what seems like a tough conversation prior to close. The conversation will be more difficult down the line if taking what seems like the "easier road" absent prudent credit structure that may simply require some additional education by the lender to the client, or their team, having influence on the financial & operational facets of the business - in Middle-Market C&I WC, CapEx & M&A especially.
I have seen lenders and consultant finance facilitators kill the deal or move it to a new lender when the company requesting the financing is too aggressive and demanding
Over-negotiating can slow progress and affect future partnerships, so it's essential to find that sweet spot between diligence and rapport.
Jeff, there have always been two types of people, Deal Makers and Deal Breakers
Principal at Superior Business Lending, LLC
3mowww.superiorbusinesslending.com