Go fast, save time. 6 simple steps for an effective negotiation process.

Why do deals get bogged down?  If the business side makes sense, two things could hold you back: bad process or bad trust.  

You've aligned on the broad deal with your business counterpart.  You want to move fast and you want to avoid long negotiations.   You get the lawyers to prepare a draft contract and you send it over, asking your counterpart to review it quickly.  Right?

Wrong. I have seen many deals slowed down or tripped up because everyone ends up negotiating the contract, not the deal.  There are several reasons why sending a draft contract too early in the process will make you lose your way:

(a) it makes it difficult to align on and keep track on your top objectives;

(b) you spend disproportionate time and effort on the detail;

(c) you are more likely to be slowed down by non-critical legal issues.

There is a better way. 

It's a methodology I have developed and used successfully in many commercial transactions.

It goes like this:

Step 1:  Align internally on the key business objectives and write them down.  High level, normally between 3 and 6.

Step 2:  Translate those objectives into high level contractual objectives.  There should be one or two simple commercial statements matching each objectives.  Align on these internally. 

Step 3:  Prepare a short negotiation plan (your best case and compromise positions, and what the other side is likely to want).  This will help you to establish your opening terms and so position yourself in the best way for for step 4 - you don't want to be too soft, but being too aggressive can slow you down and erode trust.

Step 4:  Convert the contractual objectives into a term sheet (a non-binding statement of what the parties understand the deal to be).  This should normally be a couple of pages, summarising the key terms of the deal in simple commercial language.

Step 5:  Negotiate the term sheet with the other side.  It may be useful to share your key objectives with your counterpart (the non-confidential ones!) and ask them to set out theirs.  This is a smart negotiation tactic which captures the commonality of the objectives, to be called upon to unstick tricky negotiations. 

Step 6:  Now that you have agreed the term sheet, you can create and share the contract.  If you've done it correctly, you should move quickly through the remaining commercial details and legal points.  

You should be working with your legal team at each of these stages.  The earlier you get them involved, the better they can help you navigate the objectives by identifying barriers and opportunities, and positioning you in the best way for the negotiations.  And don't forget to use the negotiation plan you started at Step 3.

Like this method?  I have developed simple templates for each of these steps and can help you implement this methodology into your processes. 

You don't think this method fits your needs?  The steps can be adjusted to suit different deal structures and levels complexity.

Get in touch with me at denis@potemkin.legal if you think this could help you.