As business lawyers, one of the tasks we are called upon to do is to negotiate, whether it be for the purchase or sale of a business, negotiating the terms of a real estate deal, drafting leases, or straightforward contract negotiations.
While legal negotiations contain an added element of complexity, all of us negotiate to some extent in our daily lives. Here are some tips you might find helpful in your next negotiation:
- Remember the old adage: “Buy low, sell high.” You can make money on both ends of a transaction. For example, if you are buying real estate, getting in at a low price has just as much economic value as selling for a high price. If you do your homework on the purchase end of the transaction, you are under less pressure to maximize the last dollar on the sale. Good investors make their money buying right.
- If you don’t ask, you won’t get. In any negotiation, if you don’t ask for a really good deal you stand zero chance of getting one. Some people are afraid to ask for a lower price if they are buying (or conversely, a higher price if they are selling); remember, the person with whom you are negotiating can only say no, and they might say yes.
- Remember that perception and reality are two different things. In a negotiation, how your opponent perceives your position may be more important than the reality of your position.
- Don’t let principle get in the way of sound business judgment. Holding out for the last nickel can sometimes derail an otherwise good deal. Instead, use the 95% rule: If you are getting 95% of what you are looking for, make the deal and move on. That additional 5% costs time and money, not to mention the emotional capital that can be used up in wringing the last few points out of the deal.
- Finally, sometimes the best deals are the ones you don’t make. More than once I have had clients tell me after a failed negotiation that they were ultimately happy the deal was not made. Often a better deal comes along or a disaster is avoided. Remember, not losing money has the same economic value as making money.
— Kevin Palmer