Second Time's The Charm

Keep these points in mind when you have to renegotiate a deal.
Magazine Contributor
3 min read

This story appears in the June 2002 issue of Entrepreneur. Subscribe »

Just as authors say that to write means to rewrite, so can deal-makers say that to negotiate means to renegotiate. Strikes, lawsuits, changes in bargaining position or any other freakish events can provoke a renegotiation. However, this much is certain: The more ongoing your relationship with the other side, the more likely that your deal will, at some point, need to be massaged, adjusted and/or surgically reconstructed.

Think of renegotiation as a deal-making "do-over." Thus, you've got to prepare. For the most part, take the same steps and ask the same questions as when you cut your original deal.

First, pause, step back and think. How exactly do you want to change the deal, and why? Review your original goals and notice if they've shifted. If so, ask yourself what happened-a little introspection will keep you in touch with your own big picture. Spend some time brainstorming. There are always other options to renegotiation-for example, doing nothing or filing a lawsuit. And there will be many options within your renegotiation. Please consider them all.

Second, get help. Would it make sense to hire the same experts you used the first time around? Perhaps you need more or different experts. If you're an aggrieved party, find out if there is a licensing, professional or watchdog group that can help you straighten things out. Is there something you should read to educate yourself? For personal perspective, talk everything over with someone close to you.

Review the history of the business relationship. If there have been problems, be honest (with yourself, at least) about your part in them-it'll make you a stronger businessperson. If you need additional information, get it. Meet. Question. Inspect. Investigate. Audit. Make it your business to know what has happened and what is really going on.

As always, look for ways to minimize your risk.Would restructuring or taking more control help? Can you get more security, collateral or people on the hook? Would new or different forms of insurance make a difference? Can you demand a more favorable formal contract with stronger remedies?

If you've come this far, you should now be able to set your goals for this renegotiation with confidence. Make a checklist. Know which points you must have, which points you'd like to have, and which are expendable. As you sit down at the bargaining table, try to see things from the other person's point of view. Work together on what's not working, if you can. But recognize your leverage: If you've got it, now's the time to use it.

Ultimately, if the renegotiation is successful, everyone will shake hands on the deal (once again). Make sure you get your new deal in writing, of course. Among other things, your newly written contract will come in handy when you sit down to renegotiate again!

As the Greek philosopher Heraclitus said, "The only permanent thing is change."

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

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