Speed is critical in today's fast-paced business world. If you're not moving quickly enough and closing deals at a fast pace, you're losing out on potential growth and competitive advantage. Therefore, deal velocity has become an essential metric for any business's success. In this article, we'll discuss everything you need to know about deal velocity, including its definition, importance, and how to improve it.
What is Deal Velocity?
Deal velocity is a metric used to measure the speed at which a company's sales team converts leads into paying customers. To calculate the sales deal velocity, divide the total number of deals closed in a given period by the number of days it took to close those deals. This figure provides valuable insights into how effectively a company generates and closes leads, and how quickly the sales team operates.
Why is Deal Velocity Important?
Deal velocity is essential for businesses that want to grow and remain competitive. By focusing on improving deal velocity, companies can close more deals in less time, which leads to increased revenue and profitability.
In addition, high deal velocity indicates that the sales team is operating efficiently, which can inspire confidence and trust in both customers and shareholders.
The Role of Legal in Accelerating Deal Velocity
In the realm of deal-making, the legal team has a unique and often dichotomous role, serving as both facilitators and gatekeepers. This dual responsibility ensures that while maintaining deal velocity, they also remain compliant and protect the interests of the involved parties. Here's how the legal team manages these roles.
Facilitator: Streamlining Processes and Ensuring Efficiency
- Contract Drafting and Negotiation—Legal teams draft contracts that lay the groundwork for transactions. Their expertise ensures that terms are clear, obligations are defined, and both parties' interests are protected.
- Clarifying Legal Jargon—By translating complex legal language into layman's terms, legal teams ensure all parties understand the nuances of an agreement, which aids smoother negotiations and faster deal closures.
- Leveraging Legal Tech—Many legal teams use advanced tools like AI for contract review, digital signatures, and contract management systems to accelerate the deal-making process without compromising on accuracy or slowing down deal velocity.
- Advisory Role—Legal teams often advise businesses on structuring deals to be beneficial and in compliance with current regulations, helping guide strategies that expedite transactions.
Gatekeeper: Protecting Interests and Ensuring Compliance
- Risk Assessment—Before finalising any deal, legal teams assess potential risks, ranging from contractual pitfalls to regulatory challenges. This pre-emptive approach helps prevent costly mistakes and future disputes.
- Regulatory Compliance—Every industry has its set of regulations, and legal teams ensure that deals adhere to these, avoiding potential fines, legal disputes, or reputational damage.
- Protecting Intellectual Property—In deals involving patents, trademarks, or copyrights, the legal team ensures that intellectual properties are safeguarded, and rights are clearly defined.
- Conflict Resolution—Should disputes arise, the legal team is at the forefront, mediating issues or representing the company's interests in legal proceedings.
- Ensuring Ethical Transactions—Beyond just legal compliance, the legal team also ensures deals align with a company's ethical standards and values, which can be crucial for brand reputation and public trust.
In essence, while the facilitator role of the legal team helps propel deals forward, ensuring they progress smoothly and efficiently, the gatekeeper role acts as a checkpoint, making sure every deal is in the best interest of the company, compliant, and risk averse. Balancing these roles is pivotal to enhanced deal velocity and sustainable deal-making.
Balancing Deal Velocity and Compliance
In the fast-paced world of corporate deals and partnerships, speed often becomes the game-changer. A swift deal velocity can lead to cornering exclusive markets, securing profitable opportunities, or pioneering a disruptive innovation. But there's a shadow that lurks behind this breakneck pace: compliance. Every deal, no matter how enticing, needs to be vetted for adherence to regulations, ethical considerations, and long-term viability.
Imagine the process as a high-wire act in a circus. Deal velocity is the forward momentum needed to reach the other side, while compliance is the balancing pole ensuring stability and preventing a fall.
Understanding the Stakes
The digital age, characterised by real-time data and instantaneous communication, has heightened the expectations for rapid business decisions. Organisations that linger too long might find opportunities snatched away by more agile competitors.
Despite the rush, overlooking regulatory guidelines isn't an option.
Walking the Tightrope: Strategies for Balance
Leverage Cutting-Edge Tech—Advanced contract review software and AI-driven tools offer the promise of speed without sacrifice. They can quickly review terms, ensuring they meet compliance standards and alerting teams to potential red flags.
Promote Cross-Functional Collaboration—Encouraging open communication between legal teams and deal-makers can foster an environment where concerns are raised and addressed in real-time, minimising delays.
Continuous Training—Equip your legal team with the latest knowledge on regulatory shifts and industry standards. An informed team is better poised to make quick, yet compliant, decisions.
A Lesson in Deal Velocity and Precision
Balancing deal velocity with compliance teaches a business the art of agility coupled with precision. Just as a high-wire artist doesn't rush without their balancing pole, businesses must learn to harness the momentum of deal velocity without compromising on the stabilising force of compliance.
In the end, the act of balancing isn't just about avoiding pitfalls—it's about confidently moving forward, knowing that every step is taken with both purpose and caution.
Strategies for Legal Teams to Improve Deal Velocity
Legal teams play a pivotal role in deal-making. From ensuring regulatory compliance to protecting organisational interests, their involvement can either accelerate or impede deal velocity.
For companies aiming to strike a balance between speed and diligence, it's essential for their legal teams to adopt strategies that streamline operations while maintaining the highest standards of due diligence. Here are some proven strategies for legal teams to improve deal velocity.
Leverage AI-Powered Review Tools
ThoughtRiver uses expert-trained legal AI to review contracts and can quickly identify potential risks, clauses of interest, or deviations from standard language, ensuring faster yet thorough contract reviews.
Standardise Contract Templates
Having a set of standardised templates for common contracts reduces the need for drafting from scratch and minimises back-and-forth negotiations. It provides a consistent starting point and helps in accelerating the deal process.
Pre-Negotiate with Regular Partners
For businesses that frequently engage with certain partners or vendors, pre-negotiating terms or maintaining framework agreements can speed up subsequent deals.
Engage in Proactive Risk Management
Instead of reacting to risks, adopting a proactive approach where potential deal-breakers are identified and addressed early on can save significant negotiation time.
Collaborate Closely with Business Teams
A close collaboration between the legal and business teams ensures that legal is in the loop about upcoming deals, allowing them to prepare in advance and reducing last-minute scrambles.
Regularly Review and Update Legal Processes
Continuous process improvement, based on feedback and past deal analytics, can help in identifying bottlenecks and refining strategies to improve speed.
Prioritise and Allocate
Not all deals require the same level of scrutiny. Train your team to recognize high-risk and low-risk deals and allocate resources accordingly, ensuring that simpler deals move faster without being held up by stringent reviews meant for complex contracts.
In summary, enhancing deal velocity doesn't mean compromising on due diligence. It's about equipping the legal team with the right contract management tools, training, and processes to make informed decisions swiftly. As businesses increasingly recognise the importance of speed in today's competitive landscape, legal teams that adopt these strategies will undoubtedly prove to be invaluable assets.
Tools and Technologies Driving Deal Velocity
In the competitive business environment, deal velocity has become a critical metric for companies looking to stay agile and responsive. A swift yet thoughtful deal process can lead to improved relations with partners, better business outcomes, and a significant competitive edge.
One of the major accelerants for this increased speed in deal-making and deal velocity is the adoption of modern tools and technologies. Here's a dive into the pivotal ones, including the transformative power of Artificial Intelligence (AI).
Artificial Intelligence (AI) in Contract Review
AI-powered platforms such as ThoughtRiver can automatically review contracts, highlighting potential risks and areas of interest. This cuts down on manual review time, ensuring deals are processed faster without compromising due diligence.
Blockchain for Secure Transactions
Blockchain technology provides a secure and transparent way to record transactions, offering both parties a clear and immutable log of activities. This reduces disputes and accelerates deal closures.
Cloud-Based Collaboration Platforms
Tools like Slack, Microsoft Teams, or Trello allow stakeholders to collaborate in real-time, ensuring that everyone remains on the same page, thereby reducing back-and-forths and expediting decision-making.
Virtual Data Rooms (VDR)
VDRs provide a secure environment for stakeholders to review and share sensitive information, from due diligence documents to financials, making the M&A process, for instance, smoother and faster.
CRM and Deal Tracking Platforms
Solutions like Salesforce or HubSpot not only manage client relationships but also provide real-time insights into the deal pipeline, ensuring that opportunities are not missed and that engagements move forward at an optimal pace.
As businesses strive to enhance their deal velocity, the above tools and technologies, especially AI, have become indispensable. Their intelligent functionalities not only speed up processes but also ensure that deals are more accurate, secure, and in line with the company's objectives. As these technologies continue to evolve, businesses that adapt and adopt them will undoubtedly be at an advantageous position in the market.
Strategies for Legal Teams to Improve Deal Velocity
Deal velocity is a critical determinant of business success. Deals that move quickly from negotiation to closure provide a tremendous strategic advantage to businesses, helping to capture market opportunities and establish a lead over competitors.
Legal teams play a pivotal role in deal velocity, yet often find themselves hampered by cumbersome processes and workflows that slow down the negotiation and review process. In this section, we’ll examine some of the strategies that legal teams can leverage to improve deal velocity and drive business success.
Automate Contract Review Processes
One of the biggest obstacles to deal velocity is the time and effort it takes to manually manage contract negotiations. To address this challenge, legal teams can automate routine tasks, such as approvals and contract review, through the use of technology tools such as contract management software. These tools help eliminate bottlenecks and streamline the review process, resulting in faster closure of deals.
Identify Potential Risks Early
Delayed deals caused by legal issues can be a real headache for businesses. Legal teams can help avoid such situations by identifying potential risks early and working with other stakeholders to develop acceptable solutions. Having a clear understanding of your business’s risk tolerance can also help your legal team to finalise contracts faster.
Use Project Management Techniques
Using project management techniques such as regular reviews, assigning responsibilities, and setting deadlines can help legal teams get organised and ensure that everyone is working towards the same goal. Every activity, from contract negotiation to review, can be broken down into smaller tasks, making it easier to track progress and identify areas where improvements can be made.
Improving deal velocity is an imperative for businesses operating in today's highly competitive environment. Business success requires continuous improvement, so legal teams should experiment and iterate as they aim for a streamlined contract review process and quickly move deals to the closure stage, resulting in improved deal velocity.
The Power of Collaborative Approaches in Deal Velocity: Legal and Business Hand-in-Hand
Businesses experience constant pressure to close deals faster than ever—but at the same time, legal professionals must adhere to rigorous compliance standards. This presents a challenge for businesses and legal professionals alike. However, there is one viable solution: collaboration. Let’s explore the power of collaborative approaches in ensuring swift and successful deals, where legal and business professionals work hand-in-hand to maximise deal velocity.
Cross-Functional Teams for Improved Deal Velocity
Cross-functional teams are a critical component of collaborative deal velocity. Teams comprising both legal and business professionals leverage shared operational knowledge and resources to execute deals swiftly while adhering to the legal requirements.
Cross-functional teams also help in integrating the legal perspective into the business, eliminating the need to consult lawyers in every step. Being a tight-knit team results in faster resolution of hurdles, contract drafting, and review, and overall efficient and effective deal execution.
Creating Shared Decision-Making Structures
Collaborative deal-making requires developed mutual understanding and a shared decision-making structure that incorporates legal and business perspectives. Collaborative structures can be created through various mechanisms, including team meetings, review processes, and development of a shared understanding of deal timelines.
Investing time in development and implementing such systems paves the way for an efficient, respectful work relationship that can result in optimised deal velocity.
Incorporating AI-Powered Legal Tech
Incorporating technological advancements can streamline the collaborative process, automating time-consuming activities and tracking deal progress. Legal project management tools, including document management and tracking software, can facilitate transparency between business and legal teams.
AI-based contract review software incorporating natural language processing can also prompt quicker resolution of issues, reducing ideation, and increasing deal velocity.
Efforts to Foster Continuous Improvement
Collaboration is an iterative process and requires continuous improvement. The creation of feedback loops allows for improved performance, allowing business and legal teams to monitor what works and what needs improvement to enhance the deal-making process. The incorporation of feedback allows for process refinement and continuous improvement, leading to better working relationships, ultimately increasing deal velocity.
Final Thoughts: Collaboration Is the Key to Deal Velocity
In conclusion, collaborative approaches in deal velocity are critical. Building tight-knit teams, creating shared decision-making structures, incorporating the right technology, fostering continuous improvement, and ultimately enhancing client services by maximising deal velocity.
By embracing collaborative approaches that use legal and business expertise, you can improve the chances of successful deal execution, while maintaining legal compliance. The bottom line is that successful deals require collaboration, and by implementing collaborative methods, you can maximise opportunities for faster and more efficient deal closure.
