Preparing for a Contract Negotiation – Part 1 – Finding Your Tools
You just finished a nail-biting phone call with a big potential customer and they said their lawyers will be sending over a draft of the agreement. Amazing news! Except, now what?!
There are a million ways to approach contract negotiations and there is a lot of great information out there on general negotiation theory. So, the good news? There is a ton of information and theories out there to learn from! But, the bad news? There is a ton of information and theories out there to learn from!
So how do you prepare for a contract negotiation with so much out there? We hope this series of blogs on Preparing for Negotiations helps you figure out the best approach for you. This series will be rolled out in several parts, with this Part 1 focusing on gathering the tools (information) you need for a successful negotiation.
We can’t stress this enough – INFORMATION IS KING. We see information swing negotiations in positive and negative ways all the time. From lawsuits to customer complaints, the Internet is a treasure trove of information that can arm you with the information you need to negotiate like a pro.
Some people like to call them pressure points or leverage. But we don’t like the meaning behind those words. You aren’t looking for leverage; you are looking for tools to put in your negotiation tool box. You might use every tool or you might use only a few. The key is that you have as many tools as possible to help mold the negotiation in a way that gets you the best deal possible OR allows you to walk away because it’s not a good deal for you.
So where can you find this information? Some might be obvious and some we consider tricks of the trade. We suggest creating a separate document that details the information you have found and where you found it.
Google & Social Media Searches. Ok. So this is a pretty obvious one. But it’s scary how much information is floating around the Internet.
Google has a ton of information on all of us. Start by performing a general search on the business and the executives. Once you have exhausted that search, start refining. Search under specific categories, like Google news or The Blog Search Engine to see if there has been any press coverage or published material. Has the company’s CFO abruptly quit right before the quarterly earnings report? Does the COO regularly blog on why long-term contracts are bad business? This information can be hugely valuable to your negotiation.
We also find LinkedIn to be a killer resource to research individuals and specifically, their credibility. LinkedIn shows work histories, connections, published articles, and glowing referrals from others. While only positive information is shown, with enough digging you can figure out who is faking it and who has made it. Has the company’s VP of Sales told you that startup he is working for has been in the market for 2 years but his LinkedIn profile says six months? You may want to look at this deal a bit closer knowing a key employee is exaggerating the truth.
Facebook and Yelp have millions upon millions of customer reviews. If a company has several customer reviews complaining about a service, you should definitely know that before you sign a year-long services contract.
Google Alerts. There is nothing more powerful than the Internet working for you while you are focusing on something else. Set up google alerts on the principals of the business and the business itself. Anytime those keywords show up on the Internet, presto! The link is sent immediately to your email. Negotiations are like living beings . . . one piece of critical information can shift the entire landscape.
The Charlie App. So this handy little app is pretty darn cool. We are all about maximizing information gathering while minimizing effort. The Charlie App is all about that! Charlie scrubs your calendar for the upcoming day and sends you a “briefing” on people you are meeting with that day. It mines the Internet for news, shared interests, and social media profiles. It’s the type of information that can help you build relationships with people during a negotiation. If they are as big a Seattle Seahawks fan as you are (which would be sad because the 49ers rule), you should absolutely be using that information to build a rapport.
Pitchbook. Pitchbook is pretty much data heaven for M&A, private equity, and venture capital transactions. It is pricey, but if you are negotiating a big contract, a sale of your business, or a VC investment, it is well worth the price of admission. It provides incredible depth of information on companies, investors, funds, deal flow, LP’s, valuations, multiples etc. We could go on. Suffice to say if you are negotiating a big deal, you should be analyzing big deal data. If you are in high stakes capital markets negotiations, it can be worth its weight in gold because the valuation the VC is trying to negotiate in the term sheet might be very different from a deal he just did with your competitor.
Public Records Search. Did you know that court clerks have computer terminals where you can search public court records? If the company you are negotiating with is being sued, or maybe its founder is going through a nasty divorce, you need to know these things. Take a half day and go visit your court clerk. Ask them how to search public databases and cross your fingers that you don’t find anything! Because let’s be honest; if the company you are about to sign a services contract with could be in the middle of a multi-million dollar trademark infringement suit, you might want to think twice about how you negotiate that agreement.
There is nothing more important in a negotiation than information–information is king! With the proper information, you will have the tools to negotiate the best deal possible for you company.
We hope you enjoyed this post. Message us with comments or questions and be on the lookout for our next post in this series on negotiations.