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Posts Tagged ‘negotiations

Charity in Negotiations

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As I’ve written previously, options are critical in negotiations.  In any negotiation, both sides should brainstorm options to probe for outcomes that create mutual benefit.

I was recently negotiating a fee structure with a prospective client that was composed of two parts.  They were having a hard time stomaching one of the parts.  It was very small compared to the other part, but even though it was small we didn’t want to compromise on what we considered was a  ‘market’ price for that part.  After many rounds of back-and-forth, I asked the prospect if there was any dollar amount that would suffice.  They suggested a number, let’s call it x, that was less than what we wanted.  But we would have taken it if we had to.  Then, an idea occurred to me that I thought could create a win-win.  I said that we would take x, but we would prefer that they pay 1.33x but give us half and give the other half to charity.  I’m sure they were shocked to hear the word ‘charity’ coming from an ibanker, and even more stunned to hear us volunteering to take a lower fee, but they thought it was a great idea and enthusiastically agreed to it.

With the tax deduction they’ll get on the donation, they will end up paying about x overall.  So at little net cost to them, they’ll be able to make a large contribution to a deserving charity.  We both feel good about that, and that will surely strengthen our working relationship.  That alone is worth us forgoing part of the fee, and probably worth much more than that.  More importantly, we were able to cause a charity to get a substantial donation that they otherwise would not have received.

Written by sandykory

February 1, 2009 at 4:36 am

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Options in Negotiations

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Effective negotiations depends on having options.  Everyone knows that if you get a crappy hand in poker your outlook is bleak.  Fortunately, real life isn’t like poker.  You can turn over as many cards as you want.  So  I urge friends, prospects, and clients alike to maximize options in any negotiation.

Often it’s an uphill battle.  A company gets a feeler from a prospective buyer.  A friend gets interest from a prospective employer.  For the company or friend, it’s exciting.  You want to play it out.  Why disrupt that tantalizing possibility by creating a competitive process?  Won’t it slow things down?  What would that prospective buyer or employer say if they knew you were talking to someone else?  Isn’t that disloyal?

On the contrary.  First, realize that the buyer or employer is probably talking to other people as well.  Especially if they are serious about hiring a person or buying a company like you.  So why shouldn’t you also explore your options and create leverage?  Moreover, any buyer or employer that doesn’t want you to talk to anyone else is either (a.) looking for a naive target that they can take advantage of, (b.) unethical, or, often, (c.) both.

Written by sandykory

January 29, 2009 at 3:07 pm

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