Keep 'Em Coming
A deal that goes smoothly just might lead to future opportunities. Here's how to pave the way.
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.
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