Keep 'Em Coming A deal that goes smoothly just might lead to future opportunities. Here's how to pave the way.
By Marc Diener
Opinions expressed by Entrepreneur contributors are their own.
Notwithstanding all the horror stories we lawyers hear aboutdeals gone south, many deals are just fine and often lead to more.Astute negotiators are always looking to the next deal, andthey'll try hard to lock in future opportunities and extendpromising relationships. Here are some common techniques theyuse:
- A right, or option, to extend a deal for additional time onthe same, or adjusted, terms: This technique is verystraightforward. Think ahead. If you know you're going to needmore time, ask for it for upfront. The legendary Sam Walton,founder of Wal-Mart, once said his biggest mistake in business wasnot asking for the right to extend the underlying lease on hisfirst store. Despite his success, when the lease was up, he had tomove and start all over again.
- A right of first negotiation: For a set time, it givesone side the exclusive right to be the first to talk turkey withthe other. Although it may seem like a token concession and/or aninconvenience depending on which side you're on, it may be keyin certain situations, especially at the beginning of anegotiation. For example, by insisting on a right of firstnegotiation from the get-go, Edgar Bronfman Jr. prevented a biddingwar when he acquired MCA some years ago. For this, he was praisedby the business press.
- A right of first refusal: This approach obligates oneside to offer the other the first chance to buy something at aspecific price. If the other side passes, the first side can sellit to someone else, but not for less than their originaloffer.
- A matching right, or right of last refusal: Thistechnique gives the side using it the right to match the last bestbona fide third-party offer. By giving one side the last word, thematching 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 offirst negotiation and/or first refusal can be combined with amatching right. By the way, if you pass on a first or last refusal,don't get snookered: Insist on seeing the deal that wasactually signed to make sure it wasn't better than the one youwere offered.
- An agreement to negotiate in good faith in the future:When a softer touch is called for, this approach is just a fancyway of saying that everyone wants to do business again but willhash out the particulars later. It's more a statement ofgoodwill than anything else. By the way, its cousin, the agreementto disagree, can be a handy way of defusing conflict and isolatingissues that are best dealt with at a later stage of yournegotiation.
A speaker and attorney in Los Angeles, Marc Diener is author of Deal Power.
