Agent and Client Must Build Trust and a Plan to Get the Best Results
"He's hired me to represent him in these negotiations. But he's holding out and not telling me everything. It's like he's negotiating with me - yet we're on the same side. And the result is counterproductive for both of us. What should I do?"
Lawyers, investment bankers and other agents negotiating on behalf of others face similar situations frequently. And it's almost always a lose-lose proposition. Here are some suggestions if you're the lawyer, agent, or client.
1. Effective strategies require openness within the team
Clients that hold their cards close to their vest even with their teammates - especially if they have hired those teammates/lawyers/agents as their designated professional negotiators - are tying their representatives' hands behind their backs.
Years ago a 45-year-old seller told me he wanted to sell to a private equity group that could grow his company to a much greater degree than he could. He also said he really enjoyed being in his business and had no interest in cutting back upon selling.
Critically, possible buyers needed him actively involved due to his substantive expertise, industry relationships, and because the company was branded to him personally.
In negotiating with a private equity group with a very attractive bid, I communicated my client's interest in staying involved. They took this to heart and offered a big chunk in cash upfront plus a much greater amount if the business hit certain future milestones - milestones it would not likely hit without my client's participation.
My client, unfortunately, asked me to push back hard and request a lot more upfront with less due upon hitting the milestones. While I thought we could reasonably request a bit more upfront, I told him pushing back too hard on the cash portion would send the wrong message - that he just wanted to get out early and/or he really wasn't confident about the business' long-term prospects.
Agent and Client Must Build Trust and a Plan to Get the Best Results By Marty Latz
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The Negotiator Magazine December 2014 - January 2015