Why is it that valued relationships often explode or disintegrate when negotiations get rocky? Is friendship better for business than business is for friendship?
At best, business deals are a challenge for any friendship. Who hasn't been shocked by how differently "friends" act when haggling? You think you know someone. Then suddenly, you're fighting tooth and nail about the trivial.
In life, friendship is important for its own sake. In deal making, relationships are generally secondary. Thus, experienced deal-makers are not perturbed by aggressive, manipulative or sleazy opponents. On the other hand, we would never expect true friends to treat us like that!
Not mixing business with pleasure is one surefire way to avoid conflict. On the other hand, if you never take the risk, you'll never have the best of both worlds--a friend in life and a friend at the bargaining table.
When negotiating with friends, be candid. If you're not sure what's fair, find an objective standard. Make "what if" plans that will keep everyone on speaking terms. Like any other deal, you should put it in writing. But friends owe each other more than strict compliance with some contract. Talk it out fully before the fact.
There is more at stake when dealing with friends: Deals come and go, but a good friend is irreplaceable.