VC Cliche of the Week
All deals have a certain life span. There is no fixed amount of time that a deal can be alive, but they can’t go on forever. I am using the word "deal" to describe a potential transaction between two parties.
When two parties are discussing a potential transaction, there is a lot of work on both sides. There’s the due diligence that both sides need to do on the other, there are the negotiations over price and terms, there is investigation into alternatives that should also be a part of any good transaction. And there’s the anxiety over whether all of this time and effort will result in a completed transaction.
That is why there comes a time when you have to "fill or kill".
There is no hard and fast rule when the fill or kill time comes, but I generally feel that sooner is better than later. It’s not a good idea to let transactions get old or cold.
For venture investments, I think three to six months of serious discussions is the most that each party should put into a deal. If it takes longer than that, there is something wrong and its time to fill or kill.
There is always the temptation to buy some more time. To do more diligence. To investigate the alternatives. To negotiate one more point. Resist all of these temptations. At some point, you need to act. To fill. Or to kill.
UPDATE: "Shivering Timbers" provided this excellent discussion of the origin of fill or kill in the comments section. Since many readers don’t go past the front page, I figured I’d add an edited version to my post.
Fill or kill is a specific type of stock order used in brokerages, like
market or limit orders but much less common.
An order would be marked "fill or kill" when the customer would only accept the exact number of shares specified in the order.
To my knowledge, Fill or Kill doesn’t get used very often, and some
online brokers don’t even offer it as an option (though I’m sure their
internal systems support it).