Small commitments first

The idea

What he looks for in a counterparty is whether they do what they said they would do, especially on small things.

A document that was coming on Friday and arrives a fortnight later, without a word. An introduction that never happens. None of it matters on its own. All of it tells you what the next three years will be like.

What the first meeting shows

Who they bring

A principal who arrives alone is telling you he can decide. A principal with four advisers is telling you he can’t, or won’t. Neither is wrong, but with the second every answer will come back changed.

How they handle a question they don’t like

He asks something slightly awkward, not aggressive, and watches. Some people answer it. Some deflect and come back to it later, unprompted, which is a good sign. Some pretend they didn’t hear.

That third group will do the same thing when something goes wrong in the deal, and something always goes wrong.

Whether they are curious

A counterparty who asks nothing about the other side is either not serious or has already decided.

It runs both ways

They are reading him the same way. Who he brought, what he asked first, how he handled the question he would rather not have been asked.

None of this replaces diligence. But diligence tells you what an asset is. The first meeting tells you what the next six months will be like.