Closing the Deal
The negotiation had gone on all afternoon. Three companies were involved, each represented by a senior executive and a lawyer. A collaboration to bring an innovative medical device to the market was being discussed. Megan Davis was the only woman in the room. As a divisional VP for Marketing for Apex Technologies, a Fortune 500 company, she was also the most nationally prominent business executive present. A single mom with a teenage daughter, she had developed a reputation for combining her shrewd insights in feminine consumer products marketing with poise, charm and grace. She was also drop-dead gorgeous with a nice figure.
The lawyer working for Megan was Matt Davis, a younger lawyer from Knight & Mourning, a large nationally prominent Intellectual Property law firm. The staffing arrangement had been recently suggested by the General Counsel for Apex because of Matt's expertise in Intellectual Property, coupled with a deep background in FDA regulation of medical devices. Megan had met Matt briefly for the first time just before the negotiation. The purpose was to go over strategy and business points. Megan wanted Matt to understand not only the importance of the project to Apex but to her personally. This project was known internally to be the first corporate step in a new strategic direction. To Megan the implications were clear. If she pulled off this project, it was likely to lead to a ticket to corporate VP status for her.
Matt made a favorable impression on Megan based on his grasp of the issues and general demeanor. He also presented himself well. He was clearly a young lawyer, still building his career and credentials. But he was very self-assured, carrying himself with great confidence. Although she was not good at guessing ages, Megan guessed that he was probably a good 6 or 7 years younger than she was.
She apologized to Matt for pulling him away from his family on short notice, only to learn that there was no family, explaining that he was still at the stage of his career where unpredictable long hours and frequent weekend work made him not very compatible with family life. He was certainly attractive, clean cut, tall, with a muscular athletic build and a warm smile.
After several hours of back and forth, the final sticking point in the negotiation concerned control of the process of notifying FDA in the event that something went wrong...an injury to a patient, a manufacturing defect or recall, anything that might damage the reputation of the product in the market. The meeting had been going on all afternoon but was now hung up on control of the FDA communication issue. Literally, everyone in the room but Matt had spoken passionately about their own need to control the process. Matt had remained silent.
Finally, the lawyer for the patent owner and prospective licensor laid down an ultimatum. His position was simple. A very important revenue stream for his client was at risk. They
must
control the process. This would be a deal-breaker issue. Megan had a sinking feeling in her gut.
Matt responded to the opposing lawyer calmly, with a carefully worded, non-dramatic statement. "I understand your concerns. But this is not something we can compromise on. Adverse reaction reports with FDA happen every day. Recalls happen to even the biggest companies. The Food Drug and Cosmetic Act has both potential civil and criminal consequences. While we understand the need for collaboration and good communication, I think we realistically need to look at who has the most to lose. With all due respect, Mr. Johnson, if the product were to be recalled or subject to some adverse regulatory action tomorrow it would not make page 17 of the Wall Street Journal. But with the involvement of Apex. With Apex in the deal, it goes at least to page 2. Apex is publicly traded. Newsworthy. With all due respect, you are not in the same place. You certainly can walk away from this deal, but there is no one better positioned to make this project a commercial success than Apex. This is a deal-breaker for us. It's up to you."
Megan controlled her facial expression. This was not a position they had discussed. At the same time, she saw that Matt's logic had impacted on all of the men in the room.
Philip Powers, the attorney for the prospective contract manufacturer interjected. "I want to suggest that we caucus privately and reconvene in 10 minutes." The suggestion was quickly agreed to and the parties caucused in separate breakout rooms. Once alone with Matt, Megan spoke, "I think what you said was brilliant, but I need to point out that we didn't discuss making this a deal-breaker issue."
"I understand. Let's see how it goes. I can find a way to reopen if we need to. But what I said is completely true. Trust me. I know exactly what you need." Megan looked at his ringless left hand and wondered whether what he said about knowing exactly what she needed could possibly be true.
Back in the conference room, Philip Powers spoke first. "I think we understand the reputational risks. I think if we can work out some notice and cooperation language. We can let Apex take the lead."
Megan broke into a broad smile. "I sense a conceptual handshake here. Can we leave it to the lawyers to work out the details?"
All heads nodded in agreement.
"Great. I suggest we let the lawyers talk and get us ready to sign something."
The patent owner quickly chimed in, "I agree. Megan can I interest you in a celebration of our handshake in the bar?"
"I would love to, but I have to turn my attention to an important call that I will need to take in my room regarding a product we are importing from France."
"I understand. But thank you. As a point of information, we all feel very comfortable with Matt taking the lead in the future should we need to communicate with FDA."
"Great news. With that I will retire. Matt, I will be making my call regarding the French import on the hotel phone. Please give me a call or text me on my cell when you wrap-up. I will break-off if I need to."
"Will do."
About an hour later Matt called Megan on her cell phone. "I think we are wrapped up on details."
"Great. Do you have time for a de-brief? I need to stay in my room to receive another call. Can you come here?"
"Sure. When?"
"Whenever it's convenient."
"Now?"
"Absolutely! Suite 1101."
A few minutes later Megan answered the knock on her door wearing a short black silk robe. Matt paused when the door opened. "Oh, I'm sorry. Do you want me to come back later?"
"No. Don't be silly. Come in."
"But I see that I have not given you enough time to dress. I don't want you to be uncomfortable. I can come back."
"There is no need. I am completely comfortable." They walked into her suite where a bucket of champaign was evident on the coffee table in front of the sofa.
" Let me be clear. I did not want to 'celebrate' with our future business partners. I wanted to privately 'de-brief' with you. The call regarding a French import was actually to room service. I ordered French champaign so we could celebrate. Will you do the honors?"
Matt was knocked back. "Yes, certainly." He opened the champaign and poured.
"So you think we have a deal?"
"Yes, absolutely." Glasses clinked, followed by the first swallows of champaign.