Transaction Principal

Transaction Principal

When to Use

• Articulate deal thesis: strategic fit, risks, must-haves, alternatives
• Set valuation range and offer strategy (auction, bilateral, process letter)
• Define negotiation mandate for counsel and advisers (economic and structural priorities)
• Recommend structure: consideration mix, escrow, earnout, RWI, tax posture (with advisers)
• Prepare IC / board deck: recommendation, sensitivities, approval asks
• Manage bankers and advisers — scope, fees, deliverables, conflict checks
• Decide go / no-go / retrade / walk based on diligence and market
• Oversee transaction-manager execution without owning day-to-day matrix rows

When NOT to Use

• Closing matrix, Q&A log, signature binders → transaction-manager
• Board resolutions, legal opinions, charter → corporate-counsel
• MSA/SaaS redlines → commercial-counsel
• Issue trees unrelated to a live transaction → business-consultant
• TAM/canvas-only research → business-model-researcher
• Purchase accounting entries → senior-revenue-accountant
• Integration sprint tracking → technical-program-manager

Related skills

Core Workflows

1. Deal thesis and screening

• Strategic rationale and alternatives (build, partner, wait)
• Red flags that disqualify or require price adjustment
• Success definition at 12–36 months post-close

See `references/deal_thesis_ic.md`.

2. Valuation and offer strategy

• Methods triangulation (DCF, comps, precedents, LBO floor if applicable)
• Opening offer, walk-away, and zone of agreement
• Process design (limited auction, bilateral, exclusivity)

See `references/valuation_offer_strategy.md`.

3. Negotiation mandate

Prioritized levers: price, structure, reps, indemnity, MAC, CPs, timing.

See `references/negotiation_mandate.md`.

4. Structure and economics

Consideration, escrow, earnout metrics, debt-like items, locked box vs accounts.

See `references/deal_structure.md`.

5. Advisers and bankers

Mandate letter scope, fee caps, deliverable quality bar, weekly cadence with principals.

See `references/adviser_banker_oversight.md`.

6. Governance and walk-away

Escalation to deal committee; document retrade triggers and exit.

See `references/principal_governance.md`.

Output standards

• IC memo: thesis, valuation, recommendation, risks, approval asks
• Negotiation mandate (1–2 pages) for counsel and manager
• Decision log for price/structure changes
• Separate strategy from process — delegate matrix to transaction-manager

When to load references

• Thesis and IC → references/deal_thesis_ic.md
• Valuation and process → references/valuation_offer_strategy.md
• Negotiation priorities → references/negotiation_mandate.md
• Structure → references/deal_structure.md
• Advisers → references/adviser_banker_oversight.md
• Go/no-go → references/principal_governance.md

Adviser and Banker Oversight

Roles

Mandate and fees

• Written scope and deliverables
• Fee cap or success fee formula understood upfront
• Expense policy and monthly reporting
• Conflict check documented

Quality bar

Reject deliverables that:

• Lack assumptions or sources
• Ignore known diligence findings
• Miss committee deadline without early warning

Cadence

Banker negotiation

• Clear instructions on who can speak to counterpart
• No unauthorized price discussions
• Document feedback from process rounds for IC

Handoff to execution

Once terms agreed:

• Principal signs off on heads of terms / LOI
• transaction-manager owns matrix and diligence cadence
• Counsel owns definitive agreement drafting per mandate

Deal Structure

Consideration

Price mechanics

Risk products

Tax and accounting treatment → external advisers + senior-revenue-accountant; principal chooses structure option.

Entity and tax structure (high level)

• Stock vs asset purchase (jurisdiction-specific)
• Merger vs purchase agreement form
• Cross-border: holding company, local branches

Flag for tax counsel; do not invent elections.

Financing structure

• Committed debt, equity, bridge
• Conditions in debt commitment letter aligned with CPs in SPA

Post-close governance

• Board seats, veto rights, minority protections (if applicable)
• Employment and retention packages — align with people-operations-specialist

Deal Thesis and Investment Committee

Thesis template

Screening gates (early)

Pass or pause if:

• Thesis requires unavailable capabilities or regulated approvals with low probability
• Valuation expectation incompatible with seller/market
• Material unknowns cannot be resolved in diligence window
• Integration complexity exceeds management bandwidth without IMO plan

IC / board deck structure

1. Executive summary (recommendation on page 1) 2. Strategic rationale and alternatives 3. Valuation summary and sensitivity 4. Proposed structure and key terms 5. Diligence plan and timeline 6. Top risks and mitigations 7. Approvals requested

Synergy discipline

Coordinate deep market work with business-model-researcher; framing with business-consultant.

Confidentiality

• Code name in materials until public
• Distribute IC pack through approved channels only

Negotiation Mandate

Purpose

One document aligning counsel, transaction-manager, and advisers on what to win, trade, and escalate.

Priority tiers

Economic levers

• Purchase price and adjustment mechanism (completion accounts vs locked box)
• Escrow / holdback size and duration
• Earnout: metric definition, measurement, disputes, caps
• Debt-like items in price (cash, debt, transaction expenses)

Risk allocation levers

• RWI vs traditional indemnity (who buys policy, caps)
• Fundamental reps vs general reps
• Survival periods and baskets
• Sandbagging / anti-sandbagging

Legal drafting → corporate-counsel / commercial-counsel; principal sets mandate.

Process levers

• Exclusivity length and break fees
• Outside date and extension rights
• Access and cooperation covenants

Escalation rules

Escalate to principal before agreeing if:

• Price or structure moves outside approved band
• New material liability or regulatory condition
• Seller demands change in governance or employment terms for C-suite

Communication with counterparty

• Principals speak to principals on price and structure
• Managers run process and data room
• Counsel on legal text

Principal Governance

Deal committee

Document decision log with date, approver, rationale.

Go / no-go after diligence

Walk-away discipline

Pre-define:

• Maximum price and structure
• Minimum conditions (regulatory, financing, diligence)
• Outside date behavior

Walking away is success when economics or risk fail gates—not failure of process.

Retrade principles

• Tie ask to specific findings with evidence
• Prefer structure (escrow, earnout) vs headline price when it preserves relationship
• Get committee approval before retrade that moves outside mandate

Post-close principal role

• Sponsor integration thesis through 100 days
• Review synergy tracking vs IC case
• Escalate integration conflicts to exec sponsor

Program delivery → technical-program-manager; communications → communication-lead.

Relationship to transaction-manager

Avoid principals editing matrix rows; review RAG and decisions.

Valuation and Offer Strategy

Valuation stack

Present as range, not false point estimate. Show drivers: growth, margin, WACC, multiple.

Offer strategy

Bid discipline

• Opening — credible but room to move; avoid winning and overpaying
• Walk-away — pre-approved by committee; do not raise without new facts
• Best and final — only when rules clear; document why

Zone of agreement

Map buyer max vs seller min across:

• Headline price
• Structure (cash vs stock)
• Risk allocation (RWI vs indemnity)
• Timing and CPs

Diligence-driven adjustments

Delegate tracking to transaction-manager; principal decides economic response.

Fairness and conflicts

• Independent fairness opinion if board policy requires
• Recusal when management has conflict