Negotiating to Close

The negotiation process is often longer and more drawn out than it is portrayed in movies and TV. Often, weeks or months of preparation are involved in finding providers of the service or product you are seeking, evaluating costs of proposals to fit within a budget, and trying to synthesize the different terms. While preparation like this lays the foundation for a productive negotiation, closing a deal to completion requires its own set of skill and discipline. You can have all of the preparation and strategic negotiation skills known to man but still fail if you can’t negotiate to close.

Producing a Winning Offer

Producing a winning offer means more than simply stating a requested price. You can get what you want in your first offer but still fail to effetely win the negotiation if the other side ends up receiving terms favorable to their interest on the remainder of the agreement at your expense.

An offer is set up for success when it produces a listing of the specifics such as price, services or products to be provided, quantity, term, delivery provisions, representations and warranties, documents to be incorporated into the agreement and any other special terms and conditions. Producing these terms demonstrates a meeting of the minds, or mutual agreement, as to what you and the other side actually agreed to. If this meeting of the minds is not present and the other side seeks to breach the agreement, then they will argue that they never agreed to the deal terms in the final agreement that were not included in the original offer (i.e. your agreement is toast).

In order to secure such a meeting of the minds, it is a best practice to present offers in writing with all components of a deal. Taking notes during a negotiation also allows you to reference back to where you left off if the negotiation is interrupted. Through trial and error these notes will become an asset to your negotiation. Further, many companies and government agencies require some form of notes to document a negotiated outcome, which may be included in the contract file.

A common strategy to produce a winning offer or counteroffer is to offer an exchange of favorable terms. For example, if you are a landlord attempting to charge a higher rent to a prospective tenant, then you could counter a request for lower rent with a term granting a shorter mandatory notice to vacate without lowering the rent. This would allow you to keep the rent at your rate, while the prospective tenant would receive the benefit of more time to provide notice.

Your offer should also not shy back from offering to change unfavorable boilerplate contractual terms. All components of an agreement may be negotiated. If the other side remains adamant about maintaining provisions that are adverse to your interests, it may be beneficial to seek another party with the good or service you are seeking.

Create Win-Win Solutions

Integrating multiple parties’ interests into a fair outcome takes a significant degree of creativity and analytical thinking. These solutions are typically found in the tangential terms of the agreement, such as the completion date of the agreement. This requires understanding the interests of the other party. Crafting offers to include terms that provide for the interest of the other party may strengthen your offer if such concessions can be made. Being open to giving up items that are not crucial to your interest greases the wheels for negotiations. Also, keep in mind that this requires you to be aware of your limits and interests.

Another often complicating factor to remember in a negotiation is that the relationship does not stop once the agreement is signed. It is possible that you will have to conduct business with the other party further down the road. Therefore, it is not necessarily worth it to obtain every contractual term in your favor but obliterate your relationship and any goodwill with the other party. Effective negotiation requires detachment from irrational behavior and emotions to see beyond the current transaction. This detachment better prepares you as a negotiator to persuade the other side that your terms are fair and reasonable. If an agreement is too one sided, then the other party may refuse to do business with you in the future or they may back out of the agreement. They may also hurt your relationships with current or potential contacts by communicating negative information about you and your methods, behaviors and tactics. An atmosphere of collaboration helps prevent these disruptions in business relationships.

Closing

Negotiating projects as a business owner presents the difficulty of balancing numerous terms and interests of multiple parties. Each offer or counteroffer that you make should be made with the understanding that these offers will affect the decisions made further along in the process of the negotiation. As it comes down to closing on an agreement, the requested changes to terms typically become smaller and smaller among the parties. Whereas the negotiation may have started with large scale discussions of price and quantity, the closing eventually may turn to ironing out such details as what day and time to deliver a product.

Although you may have performed your due diligence in preparing for a negotiation, do not be surprised or offended if you ultimately settle to split the difference on certain terms. Splitting the difference may be arbitrary and have no correlation to your established reasonable criteria, but it can be the grease that gets the deal through the door.

Conclusion

            Negotiating a final arrangement requires understanding of how your offers and communication influence the other party and the agreement. The legal professionals at Dodson Legal Group are available to help you structure your negotiations for success and draft agreements that reflect the closing decisions among the parties. Call 844-4DODSON today to schedule your consultation.

 

2018-04-27T15:55:04+00:00 April 27th, 2018|Blog, Business Law|

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