Escape Velocity

In Your Back Pocket

The more people you've got on the hook, the better off you'll be if something goes wrong. That's exactly what bankers are thinking when they require Daddy to co-sign for Sonny Boy's first set of wheels. It's the best way to rope another, hopefully more responsible party into your deal. Similarly, you can try to get a formal written guarantee from the deep pocket of your choice in the negotiations at hand.

If you can, also make sure everyone on the other side of the table is "jointly and severally liable." In contracts, these magic words are the legal equivalent of "one for all and all for one." They allow you to recover everything you're owed from each individual without the incredible (and costly and time-consuming) hassle of suing all the others.

Finally, from the sky-jacker taking hostages to the local bowling-alley attendant holding your driver's license, dealmakers love collateral. Call it a lien, mortgage, trust deed or security interest-the concept is the same. When someone has promised you something or gives you some other property, you get to keep it if they don't honor their word. But giving or getting collateral is technical stuff. To get it right, you'll definitely need a lawyer-and probably a specialist, at that.

A speaker and attorney in Los Angeles, Marc Diener is the author of Deal Power: 6 Foolproof Steps to Making Deals of Any Size (Owl Books/Henry Holt).

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This article was originally published in the October 2000 print edition of Entrepreneur with the headline: Escape Velocity.

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