The Best Negotiator You Know

The best negotiator you know is always the same person:

It’s the person who is not in the deal.

Your uncle would have gotten you better payment terms. Your neighbor’s broker would have held out for lower rent. The consultant you just met would have gotten you out of the non-compete.

But here’s the catch… It’s easy to be the toughest negotiator in the world, when you have no skin in the game, when you don’t care about the opportunity cost, when you don’t care about the answer to a simple question: “Where are we if this deal falls apart?”

Of course, this does not mean that you shouldn’t negotiate vigorously or that you should never walk away from deals. We walk away from deals regularly. It just means that your walk-away points should be determined by a dispassionate, calculated analysis of risk and reward, not by non-stakeholders whispering in your ear.

And whisper they will.

The whispering generally comes in two forms: personal and professional. Fortunately, the Sunday afternoon barbeque advice from your half-drunken neighbor is pretty easy to ignore. While he may consider himself a real estate genius because his company transferred him right before the market imploded and he happened to sell his house at the top of the market, you know better.

However, it is the second-hand professional counsel that latches on to you at parties or makes its way to you through random pathways that can cause second-guessing.

“Yeah, I ran into an old college buddy at the gym last night. He used to work on Wall Street, he says we’re getting hosed on this note. Let’s stick at 9%.”

“We got them up from 6% and agreed to 8% two weeks ago. All we have left is a couple of clauses on the buyout provision, and you want to go back to them on the rate?”

“My buddy says we’re getting bad advice. If we take anything less than 8¾ in the current market we’re chumps.”

It’s conversations like this that should be viewed with high skepticism. Very few deals of substance are simple – the modern legal landscape in the United States guarantees that. The devil is almost always in the details, and any adviser of merit will be up front about needing to know more before offering true advice.

It’s the consultant or broker who, after a five minute conversation, tries to convince you (or worse someone involved in a transaction with you) that the adviser representing your interests is taking the wrong approach and getting you a lousy deal who should be viewed with a wary eye.

So…

The moral of the story: Whether you are buying a house, securing a location for your business, or striking an exclusive licensing agreement, beware the arm-chair negotiators in your life – their advice can lead you astray and cause you to miss valuable opportunities.