Fish or Cut Bait


The English language expression “fish or cut bait” implores one to be decisive; to act upon a matter or disengage; to lead, follow, or get out of the way. It is useful in many contexts, but in business development, it is a sine qua non.

To prove this point, let’s use the global healthcare industry as an example. American healthcare providers who have a unique offering (e.g., specialized knowledge, skills, or brand) are highly sought after in many developing countries. While we are definitely struggling with challenges in our own healthcare system, there is no doubt that we remain global leaders in the clinical arena, and hence our expertise – in the form of protocols, guidelines, management services, technology, systems, etc. – is in high demand overseas.

However, international partnerships and ventures are notoriously slow to develop and difficult to assess. Most large transactions take between 18 to 24 months to conclude and it is difficult to close more than one or two deals per year of sizable scale (e.g., greater than $10 Mil in revenue). Moreover, due to geographical and cultural differences – business norms, language, legal systems, transparency, etc. – the time it takes to evaluate foreign transactions is significantly greater than that for domestic transactions. Adding to the burden is the likelihood that your potential partner is also speaking to other parties, awaiting internal approvals, managing regulatory issues, securing funds, etc.

Hence, the ability to distinguish between viable and non-viable prospects at an early stage in the process is absolutely critical. The opportunity costs of not doing so are enormous, particularly if you only have the capacity to close one or two deals per year and you spend that time chasing the wrong partners. It is often the difference between success and failure of a global ventures operation. Although an art more than a science, the skill can be learned over time following some basic tenets:

  • Develop a strong working knowledge of the business culture in the target country. Also understand differences that may exist within specific regions of that country.
  • Identity the typical time frame for deal closure. Consider the specific size of the deal, its scope, clinical services, investment capital, real estate requirements, etc.
  • Carefully evaluate the time frames to achieve key legal and regulatory benchmarks, such as the letter of intent, term sheet, definitive agreements, licensing approvals, due diligence, property acquisition/leasing, physician credentialing, etc.
  • Work with local experts (lawyers, accountants, consultants) to ensure that proper diligence is conducted and appropriate deadlines are established.
  • Gather intelligence about the company and its business practices through local contacts. For instance: (a) what deals has the partner completed in the last three years and with whom? (b) does the partner have prior experience with foreign companies and how have those ventures fared?; (c) what are their standard internal procedures to close a deal?; and (d) what levels in the organization need to review and approve the deal and what are the time allotments for each?

This form of analysis should help you identify whether the company is serious about moving forward and whether it is worth your time. One of the hardest things to do is to let go of a potential deal, which is a natural fear that only increases as time passes. Executives often say, “we’ve gone this far and invested so much time and effort, let’s see it through.” But sometimes, you just have to know when to “fish or cut bait.”

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