From the May 2004 issue of Entrepreneur

Notwithstanding all the horror stories we lawyers hear about deals gone south, many deals are just fine and often lead to more. Astute negotiators are always looking to the next deal, and they'll try hard to lock in future opportunities and extend promising relationships. Here are some common techniques they use:

  • A right, or option, to extend a deal for additional time on the same, or adjusted, terms: This technique is very straightforward. Think ahead. If you know you're going to need more time, ask for it for upfront. The legendary Sam Walton, founder of Wal-Mart, once said his biggest mistake in business was not asking for the right to extend the underlying lease on his first store. Despite his success, when the lease was up, he had to move and start all over again.
  • A right of first negotiation: For a set time, it gives one side the exclusive right to be the first to talk turkey with the other. Although it may seem like a token concession and/or an inconvenience depending on which side you're on, it may be key in certain situations, especially at the beginning of a negotiation. For example, by insisting on a right of first negotiation from the get-go, Edgar Bronfman Jr. prevented a bidding war when he acquired MCA some years ago. For this, he was praised by the business press.
  • A right of first refusal: This approach obligates one side to offer the other the first chance to buy something at a specific price. If the other side passes, the first side can sell it to someone else, but not for less than their original offer.
  • A matching right, or right of last refusal: This technique gives the side using it the right to match the last best bona fide third-party offer. By giving one side the last word, the matching right offers more protection than a first refusal.

However, the other side can more easily (for better or worse) discover the true market value of what is being sold. A right of first negotiation and/or first refusal can be combined with a matching right. By the way, if you pass on a first or last refusal, don't get snookered: Insist on seeing the deal that was actually signed to make sure it wasn't better than the one you were offered.

  • An agreement to negotiate in good faith in the future: When a softer touch is called for, this approach is just a fancy way of saying that everyone wants to do business again but will hash out the particulars later. It's more a statement of goodwill than anything else. By the way, its cousin, the agreement to disagree, can be a handy way of defusing conflict and isolating issues that are best dealt with at a later stage of your negotiation.

A speaker and attorney in Los Angeles, Marc Diener is author of Deal Power.