Autopsy of a Deal – Why Do It

Outsourcing deals are often long-term arrangements that span over periods of 10-15 years. It is not unusual to see personnel changes on both sides of the contract during the term of the deal, right up to the point where there is no-one left from the original deal team on either side. For many this might not sound like an issue – after all, knowledge transfer tends to be an ongoing exercise for both parties (including knowledge transfer on how to manage and interpret the contract). Unfortunately, when the original deal team has left, and this does happen, something valuable could also be lost. What is often lost is the understanding behind the concessions made in the contract – the business reasons for the comprises (or the refusal to compromise), the starting positions of both parties on a myriad of issues, and the thinking that drove both parties to the business arrangements and ultimate wording of the contract – including, and maybe most importantly, their understanding of what the wording of the contract actually meant. When an outsourcing deal gets to the point where the teams have completely changed, the individuals left managing the contract may have different perspectives on what the contract actually means, and what the original intent really was. This can lead to protracted and expensive renegotiations as the parties struggle to understand the thinking behind various parts of long complicated contracts, particularly when they are doing so without the benefit of full hindsight.

The deal autopsy is a useful tool for each party to leave behind for the operations and “deal teams” to refer to, particularly as they experience personnel changes on both teams. The purpose of the deal autopsy is to memorialize the thinking, interests, positions and concessions behind all of the provisions of the contract. The deal autopsy should start with the objectives of each party. It should analyze each objective and describe how the objective is to be achieved under the contract. The deal autopsy should include a road map of each significant clause in the contract, or issue that was addressed by the parties during negotiations, stating the starting positions of each party, their respective interests, the compromises that they made and why, the business reasons used to support their positions and their concessions, and a business description of the agreed outcomes, and a business description of what the contract is trying to state, and why. The deal autopsy should also describe the business understanding of the risk sharing between the parties and the areas of heightened sensitivity from the negotiations. While this may seem like a make work project, the information, once captured, can be invaluable for future team members, particularly in a long term outsourcing when personnel is bound to change. This information will not only help the parties interpret the contract as time goes on, but will also help them negotiate change orders throughout the life cycle of the deal, particularly when the change orders touch on areas of heightened sensitivity, risk sharing, business transformation and economic terms. This type of information could be used by both teams to avoid unintended consequences when they are interpreting the contract and negotiating change orders that have a widespread effect throughout the contract.

Deal autopsies should be done when the deal team members are still available and the concepts are relatively fresh in their minds. Unfortunately, the best time to do a deal autopsy is soon after the contract is signed, when both teams are busy with transitioning the business to the service provider and learning their new roles under the contract. For this reason, deal autopsies are rarely done. In a long-term outsourcing, failure to do a deal autopsy could be harmful in the end.

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