Negotiations
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Negotiations

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Some tips to be considered when negotiating with a

Some tips to be considered when negotiating with a

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Negotiations Negotiations Presentation Transcript

  • The New Normal Negotiations (Asymmetric Information) 13 Feb 2010 London Tuesday, 23 February 2010 1
  • Copyright John B. Corey Jr. Chelsea Private Equity, LLC 2 Tuesday, 23 February 2010 2
  • Copyright This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 2.0 UK: England & Wales License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/2.0/uk/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 2.5 UK: Scotland License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/2.5/scotland/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/3.0/us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 New Zealand License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/3.0/nz/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/2.5/au/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 2.5 Israel License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/2.5/il/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 2.5 India License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-nc-sa/2.5/in/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. John B. Corey Jr. Chelsea Private Equity, LLC 2 Tuesday, 23 February 2010 2
  • Introduction 3 Tuesday, 23 February 2010 3
  • Introduction John B. Corey Jr. BS in Computer Science www.LinkedIn.com/in/JohnCorey Follow me on Twitter -> www.Twitter.com/John_Corey 25+ years of real estate investing; UK resident since 1994 UK, US - spanning 11 time zones www.ChelseaPrivateEquity.com/blog 3 Tuesday, 23 February 2010 3
  • Why Are You Here? 4 Tuesday, 23 February 2010 4
  • Why Are You Here? Why are you here? Let’s negotiate today’s session goals 4 Tuesday, 23 February 2010 4
  • Why Are You Here? Why are you here? Let’s negotiate today’s session goals What do you fear? What if your fear is actually true? How bad could it be? 4 Tuesday, 23 February 2010 4
  • Why Are You Here? Why are you here? Let’s negotiate today’s session goals What do you fear? What if your fear is actually true? How bad could it be? How will you know if you are getting better at negotiating? 4 Tuesday, 23 February 2010 4
  • Why Are You Here? Why are you here? Let’s negotiate today’s session goals What do you fear? What if your fear is actually true? How bad could it be? How will you know if you are getting better at negotiating? What does the word ‘negotiate’ actually mean to you? 4 Tuesday, 23 February 2010 4
  • Why Are You Here? Why are you here? Let’s negotiate today’s session goals What do you fear? What if your fear is actually true? How bad could it be? How will you know if you are getting better at negotiating? What does the word ‘negotiate’ actually mean to you? Let’s go back to square one (‘first principles’) 4 Tuesday, 23 February 2010 4
  • Definition: Negotiation negotiation noun (also negotiations) discussion aimed at reaching an agreement noun 1 (negotiations) the negotiations resume next week: discussion(s), talks, deliberations; conference, debate, dialogue, consultation; mediation, arbitration, conciliation. 2 the negotiation of the deal: arrangement, brokering; settlement, conclusion, completion, transaction. 5 Tuesday, 23 February 2010 5
  • Why Are You Negotiating? 6 Tuesday, 23 February 2010 6
  • Why Are You Negotiating? Decide what your high level goals are. A sense of direction Avoid assumptions about what will happen. Keep an open mind 6 Tuesday, 23 February 2010 6
  • Why Are You Negotiating? Decide what your high level goals are. A sense of direction Avoid assumptions about what will happen. Keep an open mind Why is the other person there? The counterparty must have a reason for engaging with you. Find out what it is. It might take time as you likely need to build trust first 6 Tuesday, 23 February 2010 6
  • Why Are You Negotiating? Decide what your high level goals are. A sense of direction Avoid assumptions about what will happen. Keep an open mind Why is the other person there? The counterparty must have a reason for engaging with you. Find out what it is. It might take time as you likely need to build trust first Know your position at all times. Spend more time doing your homework than negotiating 6 Tuesday, 23 February 2010 6
  • Background & Homework 7 Tuesday, 23 February 2010 7
  • Background & Homework Reseach the facts. For real estate figure out the details about the property, who the owner of record it, what else might be on the property title, the numbers, the area details, the demographics You cannot brainstorm for ways to make a deal work if you do not even know what you are dealing with. Grab the bull by the horns. And keep an open mind 7 Tuesday, 23 February 2010 7
  • Background & Homework Reseach the facts. For real estate figure out the details about the property, who the owner of record it, what else might be on the property title, the numbers, the area details, the demographics You cannot brainstorm for ways to make a deal work if you do not even know what you are dealing with. Grab the bull by the horns. And keep an open mind Understand the counterparty’s problems. They do not volunteer the ugly stuff to a stranger. Get to really know them. Two ears, one mouth. Listen. [Bring duct tape if necessary - joke!] 7 Tuesday, 23 February 2010 7
  • Use a Process 8 Tuesday, 23 February 2010 8
  • Use a Process Use a standardize process to stay on target. Scaleability is improved. 8 Tuesday, 23 February 2010 8
  • Use a Process Use a standardize process to stay on target. Scaleability is improved. Turn your process into a methodology. Brand/name the methodolgy Methodologies have visible attributes: forms, checkpoints, deliveries 8 Tuesday, 23 February 2010 8
  • Use a Process Use a standardize process to stay on target. Scaleability is improved. Turn your process into a methodology. Brand/name the methodolgy Methodologies have visible attributes: forms, checkpoints, deliveries Tangent: People pay more for a methodology than they will pay to rent time from a person. The Big 4 sell methodologies. Security & trust 8 Tuesday, 23 February 2010 8
  • Use a Process Use a standardize process to stay on target. Scaleability is improved. Turn your process into a methodology. Brand/name the methodolgy Methodologies have visible attributes: forms, checkpoints, deliveries Tangent: People pay more for a methodology than they will pay to rent time from a person. The Big 4 sell methodologies. Security & trust You can build trust with a stranger when you show them how you will use a methodology to safeguard their position; to solve their problems 8 Tuesday, 23 February 2010 8
  • Methodology 9 Tuesday, 23 February 2010 9
  • Methodology (1) Initial contact - standardize the info you collect Educate the counterparty as to the steps they can expect (1-7) Do what you tell them you will do. Make it easy for them to see you are doing it. Reports, check lists, email updates (2) Research the property & collect all the background info (3) Interview the counterparty to fill in the gaps plus verify the info; due diligence. Remember, verify the facts independently 9 Tuesday, 23 February 2010 9
  • Methodology (cont.) 10 Tuesday, 23 February 2010 10
  • Methodology (cont.) (4) Present your offers. Yes, seriously consider presenting multiple offers so the seller has choice Explain how the each offer addresses what the counterparty needs. Logically, let them write the offer (5) Follow up to get closer one way (deal) or another (no deal) (6) Execute to plan following on the methodology. No ad-lib (7) Manage steps after agreement to completion using the methodology 10 Tuesday, 23 February 2010 10
  • Poker Face 11 Tuesday, 23 February 2010 11
  • Poker Face Be prepared to walk away. No deal should be a make or break deal. Avoid those situations 11 Tuesday, 23 February 2010 11
  • Poker Face Be prepared to walk away. No deal should be a make or break deal. Avoid those situations Let the counterparty come back to you. If your offer is a good one then let it stand. Be in no rush to change or improve your offer 11 Tuesday, 23 February 2010 11
  • Poker Face Be prepared to walk away. No deal should be a make or break deal. Avoid those situations Let the counterparty come back to you. If your offer is a good one then let it stand. Be in no rush to change or improve your offer Silence is your friend. 11 Tuesday, 23 February 2010 11
  • Poker Face Be prepared to walk away. No deal should be a make or break deal. Avoid those situations Let the counterparty come back to you. If your offer is a good one then let it stand. Be in no rush to change or improve your offer Silence is your friend. Let the counterparty speak first. First person to specify a number looses 11 Tuesday, 23 February 2010 11
  • F.U.D. 12 Tuesday, 23 February 2010 12
  • F.U.D. Fear, Uncertainity & Doubt are the three horseman that will kill many a deal. Sometimes you have it and sometimes the counterparty has it. 12 Tuesday, 23 February 2010 12
  • F.U.D. Fear, Uncertainity & Doubt are the three horseman that will kill many a deal. Sometimes you have it and sometimes the counterparty has it. Break down the issues. Smaller issues are easier to handle 12 Tuesday, 23 February 2010 12
  • F.U.D. Fear, Uncertainity & Doubt are the three horseman that will kill many a deal. Sometimes you have it and sometimes the counterparty has it. Break down the issues. Smaller issues are easier to handle Use checklists so you do not miss things Share the checklists so the counterparty knows you have them covered and your competition is not equally prepared 12 Tuesday, 23 February 2010 12
  • F.U.D. Fear, Uncertainity & Doubt are the three horseman that will kill many a deal. Sometimes you have it and sometimes the counterparty has it. Break down the issues. Smaller issues are easier to handle Use checklists so you do not miss things Share the checklists so the counterparty knows you have them covered and your competition is not equally prepared Reduce F.U.D. by reviewing so many deals you know the checklist by heart 12 Tuesday, 23 February 2010 12