- Financial Analytics platforms: Bloomberg, FactSet, S&P Capital IQ, Refinitiv Eikon
- News Providers: Lexis-Nexis, Dow Jones Factiva, Acuris, TheDeal
- IT Market Research: Forrester, Gartner, IDC, IHS, Ovum
- Audience Measurement: comScore, Nielsen, Quantcast, SimilarWeb
- Oil & Gas: Drilling Info, IHS, Wood Mackenzie
- Private Markets: Preqin, Pitchbook, Datafox, CB Insights
and so forth.
In each case, you'd want to create a competitive process to get the best price. If, for example, Factiva thinks you may go with Lexis-Nexis, you're likely to get a far better deal than if they think they're the only outfit under consideration.
But sometimes, you can leverage an early non-competitive discussion into a great deal - if you're willing to go with a vendor without running a full vetting process.
There are risks, obviously. You're proceeding with a service without conducting a detailed comparison of competing products. You also run the risk that you may overpay.
But if the circumstances permit, you can try what I like to call the Preliminary Discussions Gambit (PDG).
Here are the necessary preconditions for a successful PDG:
- The vendor is a disruptor to the space and challenging entrenched incumbents;
- The vendor is flexible on price;
- The vendor doesn't have a lot of customers yet, but have a fully commercialized and usable product.
- The vendor is often PE backed and looking for customer growth and not particularly worried about maximizing revenue (i.e. they have cash to burn);
- The product you're buying isn't business critical and is a low risk acquisition - the cost of failure is low;
- You're already somewhat familiar with the products and vendors in the category.
To execute a successful PDG, tell the vendor you're just in "preliminary discussions". You haven't begun speaking with any other firms -- typically the incumbents they're trying to take business from. You're almost always going to get a better deal if the vendor reaches out to you first, but it's fine if you reach out to them.
Many times, a vendor will try to preempt your vetting process and try to land a deal before you've started. That's ok! In fact, use it to your advantage. You probably won't have more leverage than at any other time in the negotiating process - take advantage of it. You might even make the first offer - and be quite aggressive about it. You may be surprised - the vendor may go for it.
It's rare that you will take a product from a vendor without undertaking a thorough review of the landscape. But occasionally, the circumstance are ripe for the Preliminary Discussions Gambit. Don't hesitate to try it - as long as you know the risks.
- Kevan Huston