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“Time wounds all deals”, a Stephen Schwarzman quote from his autobiography ‘What It Takes’. This is so true. I used to always say “time kills all deals” until I read the same sentiment in Schwarzman’s book. Perhaps my version was a little extreme as time does not necessarily kill off all deals, but it certainly does make them less likely to happen each day that goes by. Even if a deal does proceed, there is a chance that everyone in the deal is feeling quite bruised from the ordeal. This can become a bigger issue if it is a development finance loan which means you are working alongside those same people for upto 12-24months.
Most people that are involved in making a deal happen are incentivised in some way. Whether it be an immediate commission due, a promotion, Christmas bonus or even the simple satisfaction of completing something and moving onto a fresh project. And they most likely have several deals they are working on at any one time. When there is one or more deals that are sticking around for some time, staring at a pipeline of deals that are in process can be quite exhausting. The number of hours you have invested in those deals have probably more than outweighed the amount you will earn from it. This brings your hourly rate down to levels you would not normally be comfortable with. Or worse, making you operate at a loss.
I have had this conversation with people in many industries and “time wounds all deals” is for sure transferable. Last week I spoke to a contractor and he said, “there is nothing worse than being stuck on a construction project that was due to complete and for one reason or another, we are still on site finishing things a few months after the initial projected PC. It becomes tedious”. Another recent scenario was a developer looking to complete on a deal that had been running for months due to numerous reasons from delays with the vendor, land registry, surveyors and planners to name a few. With everything finally lined up including the finance, the developers own solicitor was more occupied with sending his client emails as to why a two-week time frame was not enough time to complete (despite us doing exactly that with another more complex site for the same developer a month earlier with a solicitor we recommended). As you can imagine, the agent, the seller, and the developer themselves all felt like this was the deal that never ends and therefore might never happen.
Over time, circumstances, economies, sentiments and appetites all change. What was a fair and exciting deal months ago may no longer be so appealing. The recent nightmare of significantly delayed turnaround times from term loan lenders has caused much distress for investors, buyers, and sellers. Managing expectations when deals drag on and keeping everyone keen to persevere is a tasking job.
People generally find excitement and motivation with progress. Repetition can be mundane like listening to the same musical loop over and over again. We need to hear, see and feel the progression and enjoy what is coming next to stay interested.
Within property investment, development, and finance there are numerous professionals that make up the value chain. Amongst those roles it is important to work with people that are reliable, competent, passionate, decisive and have high standards of communication. We can then sacrifice less deals to inefficient processes and indecisiveness, keeping everyone moving towards their goals with less disappointments and better results.
Written by Saam Lowni - Managing Director, Merryoaks.
