- Prepare well!
- Know the following:
- Your BATNA (best alternative to negotiated deal).
- Your reservation (walk-away) price.
- The ZOPA (zone of possible agreement).
- Identify and question your key assumptions.
- Control agenda. (Easier for buyers.)
- Know your motivations.
- Find out what you can about other side’s motivations.
- Find out what you can about negotiating teams on both sides.
- Giving your attorney limited authority may be to your advantage.
- Set high aspirations. (This will give you room to negotiate.)
- Negotiate in person when feasible.
- Take detailed notes.
- Identify main issues. To whom does each mean more?
- Control drafting.
- Identify what’s omitted – in negotiations and in drafts.
- Ask lots of questions. You may be surprised what you learn.
- Listen and observe carefully (e.g., for new info, assumptions, weaknesses, conflicts, potential concessions, credibility).
- Time is very important:
- Is this a one-time deal or long term relationship?
- Find out time pressures on both sides.
- Be skeptical of deadlines.
- Be patient (e.g., to get whole story or for other side to get used to proposal). If time is on your side, use it.
- Be creative about timing elements in contract (e.g. payment schedules).
- Watch out for time value of money and satisfaction.
- Consider different time horizon for contract (e.g., follow-on sales).
- Fatigue can be very powerful influence either way. Beware.
- Consider risk sharing (e.g., percentage rather than fixed payment; limitation of liability as to amount and/or type of damages; and time limit for claims).
- Use cooperative mode to break impasse.
- Caucus liberally.
- Concessions:
- Be creative! How can a better deal be made for both parties?
- Don’t concede on a quid pro quo basis.
- Resist splitting the difference. “I can’t afford to.”
- Tally significant concessions by each side.
- Get something for every significant concession.
- Give concessions that cost you little or nothing.
- Resist a significant demand like water – fall back, listen, think, advance slowly.
- Price – Advice to seller:
- No competing package is exactly the same (so price may vary).
- Defend price persistently.
- If you lower the price, get a concession (e.g., greater volume, faster payment, lesser quality).
- Avoid giving discounts for paying within x days. The buyer often will take the discount even if late.
- How long is the price good for (both in terms of offer and contract)?
- Avoid giving price breakdown.
- Inspection and acceptance.
- Buyer should insist on it. Seller should insist on a clear standard and provide for deemed acceptance after time or use.
- Consider third party inspector (e.g., if big deal and major sticking point).
- Consider threat, last-and-final offer, deadlock (walk). Use sparingly.
- Don’t underestimate your power.
- Don’t overestimate other side’s power.
DISCLAIMER (of course): This is NOT legal advice. Moreover, the contract law of each state varies. Seek competent legal advice for your contract matter.