What you need to know about NDA's

Being an intermediary, facilitator or broker, is not reading about a deal in a board and post it in another with the hope that somehow the deal will close and you make so much money you are set for life. It does not work like that.

Apart from knowing what you do, the next two things are to know the principal and verify the deal is still on. Never go into a deal until you know the principal and that the deal is still open and/or confirm and verify both. If there is a mandate, ask him for his contract and see if he has authority to deal and sign contracts in behalf of the principal. Verify. If the so-called mandate refuses, drop the deal, do not waste your time.

Most deals have a buyer and seller and money is flowing from buyer to seller and product and/or service to the buyer. Make sure your seller has the product and the capacity to deliver it. Make sure your buyer has the economic capacity to pay. Again, verify. Never just rely on the word of anyone, verify. If you are not let to verify, is probably another broker, who did not verify, defending his turf, drop the deal; do not waste your time.

Now you must negotiate a price that allows for a margin that makes the deal not just make price rent-able but that cover all costs (carry, commissions, legal, logistics), taxes and currency risk when applicable. Within that viable price, there is the reason you are justified to get the deal, and, therefore, answer the question 'Why me?'

Your deal must have an economic justification. Although sometimes imperfect information can let bad deals to be closed, this could revert back to you. The deal could suddenly fail, you could be circumvented and/or your reputation can suffer. When a bad deal gets closed due entry barriers, it is an invitation to others to look for a solution to this, and if you do not use the opportunity to get that solution, even if your future deals are less immediately profitable, others will fill the void for you and the train may leave without you. Always ask 'Why me?'

Make sure your contracts have teeth. It can be a legal clause that can be enforced or better, a performance bond guaranteeing at least, your commissions and any other expenses. You will lose most of your deals, but, you know what? These were probably the bad deals that would have wasted your time or let you without commissions.

If you do not want circumvention, use Transferable LCs or a trusted third party, like a paymaster with escrow capabilities (we offer these services).

The following paragraphs are an excerpt from the message we send to all our new contacts.

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If you are in the very difficult and though business of being a facilitator, intermediary or broker, yes, we accept to see your referrals (as long as these do not deviate much from what we do or the way our entities work), and we do appreciate your hard work and make sure you are paid your commissions, but we only accept deal flow that is ready for show time, and we only entertain dealing with people and/or organizations that can show proof of economic capacity, and this, via their principals, decision makers and/or signatories. We never negotiate an actual deal via non-principals or non-signatories.

Unless you are affluent enough to live on your wealth and provide for yourself and your family and keep up with the expenses of this business (including attorneys and other experts), do it part-time or as a hobby and have a job that provides enough for yourself and your family and expenses. That big billionaire deal may be just around the corner but, for most, it will not close in their lifetime, smaller deals may be easier but still are very tough.

Most brokers will never close a deal. Why? Because this is not just a legal and economic minefield, which already make things tough and risky. There are so many ignorant and naive believing that cross-posting something from one forum into another will make them rich if someone picks the deal and do the real job for them.

Many deals are fake or have been closed a long time ago or retired from the market. Unless you know your principal, you will never really know. Even deals with real, ready, willing and able principals, fail often because the match is not perfect and/or the economics changed or is just not there. Add to this, the crooks, scammers, criminals, opportunists and dishonest people.

Generally, the more moving parts a deal have, the more propensity to be subject to economic forces beyond your control is, and this, not counting the chains of broker-jokers fighting for their commissions and acting like a principal without having the deal properly structured and with the Due Diligence and Compliance completed.

Is there is any hope to live in this line of business? Of course! Look at every manufacturer and distributor. Someone is selling, doing business development and closing deals for them. Many times, this is done by employees and many times via entrepreneurial independent parties, especially, in growing businesses, already with traction, but, still not enough revenues to pay the kind of expensive professionals a bigger firm can. Is a matter of hard, intelligent, professional grade work, real viable connections on each side of the deal, the law, and economics.

-Padraig Walsh-