When you negotiate are you playing chess or checkers? How good of a negotiator are you?
“Being a good negotiator has a lot to do with knowing how to create a fair deal for both sides to get as close to what they both need from the deal as possible”. Roland Frasier
It’s helpful to consider the documentation side of negotiating. Entrepreneurs often play ‘cut and paste’ lawyer to avoid time and expense – or, they use an attorney who is eager to move onto the next case, and may have no real-world experience of dealing with the actual consequences of the clauses they put into their documentation.
Every single word of a contract or agreement is important, so if you or your attorney don’t fully understand why everything is in there, then you might be setting yourself up for more than you bargained for, literally.
In this episode, Roland gives us 25 things that good negotiators AND deal documenters are thinking about BEFORE anyone drafts ups a contract.
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Roland’s Deal Documentation Negotiation Categories
(Keep in mind this is NOT an exhaustive list!)
Be sure to pre-think about:
1 Taxes
2 Effort Reduction
3 Liability Constraints
4 How can we assign or fractionalize liability?
5 Damages in terms of a failure to perform on the contract?
6 What if somebody does something that is negligent?
7 What about the creation and ownership of Intellectual property? Including Customer Lists.
8 What are the legal defenses that we can build into the deal?
9 Indemnification – what if someone suffers damage?
10 Performance and time? Are there any parameters for which you want performance to occur?
11 What about Disclosure to third parties?
12 Exposure of yourself personally?
13 Exposure of your company or companies?
14 What about access to trade secrets or accounting information?
15 What about discovery in the event of a dispute? Do you have a right to see documents or video for example?
16 Interpretation?
17 What about how you’re going to resolve disputes? Are you going to submit to The American Arbitration Association or the Judicial Arbitration Mediation Service? Is that what you want? How can you keep it out of court?
18 What about modifications?
19 What about duties? The things each party is supposed to perform and triggers for that?
20 What about rights (and are there triggers for additional rights)?
21 How is payment to be made?
22 Third parties? Are there any Third Parties that you want to include in the deal or that can create a liability for you – that you might want to exclude?
23 What are your remedies if things don’t work out?
24 Does the person who is entering into the agreement have the authority to?
25 What about representations and warranties?
“Next time you’re preparing to paper a deal or you’re having a conversation about deal points, you need to be actually aware that this is a game of chess, not checkers…” Roland Frasier
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References Mentioned in this episode:
Never Split The Difference Book
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