Preparation is the key to success. Write down your goals, desired price range, and other material terms.
Assemble supporting documents (Preparation)
Organize any documents that may be relevant to present to the other side to give support to any points of contention that may arise.
Gain knowledge of the legal ramifications of your transaction (Preparation)
Consult with competent legal counsel on important transactions. Certain purchases may have tax consequences, require shareholder approval, or necessitate understanding of legal terminology or phrases. Be sufficiently informed of all potential benefits or consequences.
Prepare a preliminary contract (Preparation)
It is important to get an idea of your ideal contract, with terms most favorable to your side. This contract may be presented to the other side early on to serve as a basis for the negotiations. Again, experienced legal counsel should be able to either draft a provisional contract for you, or review one you prepared.
Present your side (Negotiation)
Present your side's provisional contract and supporting documentation. Keep your main goals at the forefront.
Listen to the other side (Negotiation)
Look over the other side's contract to determine immediate sticking points. Prioritize differences to determine points of contention.
Identify authority (Negotiation)
If you have not already, determine who has the ultimate authority to speak on behalf of the other side, or whether the negotiators must gain higher approval before an agreement can be reached. The person doing the most talking does not always have the authority to contract.
Discuss differences (Negotiation)
Talk about each side's differences on an issue by issue basis. Expect several drafts to emerge, with each side conceding certain points. Maintain a consistent voice if you are with multiple members of your side. This approach will convey confidence at the negotiating table.
Create the final version (Negotiation)
Cover all major terms which reflect a consensus of the negotiations. Be careful to review the finalized version if drafted by the other side.
Compare boilerplate provisions; modify if needed (Negotiation)
Compare boilerplate provisions between the sides to confirm uniformity. Hopefully, you have already met with a competent business attorney which conveyed the importance of these standard provisions. Make minor modifications if necessary to meet a consensus.
Have your lawyer look it over (Negotiation)
Prior to signing any agreement for a business transaction, have a business attorney review the terms to ensure fairness, enforceability and any future ramifications or consequences.
Take the time to do things correctly! Poorly constructed contracts lead to contract disputes. Do the preparation up front and avoid problems in the future!
Additional resources provided by the author
UCC section 3101 et. Seq. on Negotiable Instruments
Better Business Bureau Report on “Before-you-sign Prerequisites” & Contract Basics
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