So, now we can think of nothing apart from the royal baby! How exciting and heart-warming it was to see William and Kate standing on the steps of the hospital. A truly historic moment, but at the same time, they are just like any other young couple who have had their first baby: emotional, overwhelmed and excited. But, of course, the thing we know about William and Kate, is that this is built on a strong foundation: the baby’s an end result, but it’s after years of establishing and working at their relationship. And you can bet that a lot of it’s been less glamorous than it seems.
All this got me thinking about doing business and how, as in personal relationships, this needs to be build on solid foundations. In the first fine flush of a business relationship, as in matters of the heart, you can, let’s face it, get a bit carried away! You see each other across a crowded (conference) room, and before you know it, things have got to a place you didn’t plan them to be and you’ve managed to make commitments you may later regret.
Time to take a step back. Doing business together is all about combining impulse with planning and, quite simply, making sure your interests are protected. And we at Rocket Lawyer are here to help you make sure you’re covered.
As soon as you think about a potential deal, make sure your proprietary confidential information – all that stuff which you’ve worked so hard to create and which is the real value in your business – is protected. One of the first things you need to do when you start to discuss a potential deal with another business is sign a Confidentiality agreement, or Non-disclosure agreement (NDA), as soon as possible. This will help make sure the other side protect your secret information and only uses it for the purposes of deciding whether to enter into the deal you’re discussing. Use Rocket Lawyer’s Mutual Confidentiality Agreement if you’re both sharing secret information and our One-way Confidentiality Agreement if only one side’s sharing secret information.
Once you’ve decided that you would like to start negotiating a contract, another extremely useful document is a Letter of Intent, or Heads of Terms. This is a non-legally binding letter, which states the key terms of the contract under discussion and includes a target signing date. It also sets out certain things that may need to be completed or secured before the contract can be signed: e.g, an investigation of the parties (called a “due diligence” exercise) or consents, both internal (e.g. board of directors) and external (e.g. a regulatory authority).
The advantage of setting out these things in a non-legally binding letter is that it can help the parties to focus their minds and smooth future negotiations. It can stop that “Oh no!” moment, when you discover that you’ve been talking at cross-purposes for 6 months. But because the Letter of Intent’s not legally binding, either side can leave the negotiations without fear of reprisal.
But a Letter of Intent also has “teeth” – it’s sensible to include some legally binding clauses, such as confidentiality (unless you’ve already signed an NDA) and a non-poaching clause, which stops the other side from trying to entice away your key employees (a real risk in negotiations).
Follow our simple interview to create your Letter of Intent. This can be adapted for a variety of deals and situations and has options to include all the legally binding stuff set out above, and more.
If you combine impulsiveness with caution when doing business, you won’t regret it, and you’ll create a solid foundation for your future relationship together.