Hillcrest’s Donato Sferra: 3 Tips for Negotiating An Investment Deal

By
IntelligentHQ

While direct investing receives lots of press, the role of middlemen who help negotiate major deals is often overlooked.

Yet for those who have the skill to push through investments or acquisitions between large companies, it can be a very lucrative business.

As a managing partner of Hillcrest Merchant Partners, Donato Sferra has accumulated diverse experience in the counsel and negotiation often required when two companies decide to form partnerships or acquisitions. He also specializes in Canada’s emerging cannabis industry.

Through Hillcrest Merchant Partners, Sferra has been involved in several major deals within the last few years, including The Valens Company acquisition of Citizen Stash Cannabis Corp. in November 2021, Aurora Cannabis restructuring its debt and investing in Choom in July 2021, and Choom Holdings Inc. acquiring Phivida Holdings Inc. in September 2020.

He also helped negotiate the acquisition of Galaxie Brands Corporation by The Green Organic Dutchman Holdings Ltd., or TGOD.

Offering counsel on these deals requires lots of homework and patience, Sferra said.

“Some people might see a mountain where we see a hill,” Sferra told Ideamensch in 2018. “So, our job is to guide companies or CEOs, other entrepreneurs, over that obstacle. We help them get over it faster. That’s the name and the meaning behind it.”

Here’s a few tips from Donato Sferra on negotiating a deal — the smart way.

Listen & Learn

Many of the best negotiators listen as much — or less — than they speak. It’s important to listen to what both companies are offering before making any suggestions, Sferra said. What are the concerns of the two companies involved? What are they most excited about? What do they need?

The answers to those questions come not only from “doing your homework,” Sferra said, but also from paying attention to the parties involved.

“It’s crucial to understand the motivations of your clients at least as well as they do themselves,” Sferra said.

Balancing Rewards

Without mutual gains, no two companies will agree to a major deal, be it an acquisition or a partnership. A skilled negotiator can point out the various ways a deal benefits both companies, and even find additional points of interest that the owners haven’t considered, Sferra said.

An investment — and especially an acquisition — is not a simple relationship, Sferra said. Both sides must begin the process with shared goals or perhaps similar challenges. What does each company offer the other? Do they complement each other’s needs?

“A negotiator must be able to answer those questions before stepping into the room,” Sferra said.

Stay Open to Possibility

While it’s important to understand the minimum requirements each company needs for a deal to be mutually beneficial, it’s also vital to keep an open mind.

It’s better to be flexible and listen to other possible terms of the deal — even if they seem disadvantageous at first, Sferra said. Too much inflexibility can stall negotiations, or make the other party feel that it’s possible to have a conversation.

“You shouldn’t fold on everything, but it’s important to at least show a willingness to find a middle ground,” Sferra said. “In the long run, more people will want to work with you if you don’t immediately dismiss other offers.”

Perhaps most important of all for entrepreneurs interested in the art of the deal, Donato Sferra said, is to never miss an opportunity to meet with someone.

“I take every meeting offered to me,” Sferra told Ideamensh in 2018. “I’d say taking every meeting is important because you just never know who’s going to bring you that next incredible idea.”

RELATED ARTICLESMORE FROM AUTHOR