We Lead or We Participate

Over the years, I’ve been in many multi-party negotiations. I don’t know the maximum number of participants in a single negotiation, but I’m sure it’s greater than ten active negotiating parties in a transaction.

I don’t mean the number of entities participating in the transaction, but the actual number of active negotiating entities. The best way to figure this out is to count the number of different law firms involved in the transaction.

We shifted our behavior some years ago. Often, we lead deals. When we lead, we negotiate the terms. We work collaboratively with any other co-investors, but we’ll take the lead.

But, if we don’t lead, we follow. This can be tricky, as our instincts (or ego) can often get in the way since we are used to leading deals. Or, the lawyers can get confused about what our real goals and intentions are in the negotiation. We always have a few key things that we need, but these are almost always non-controversial. But they can get mixed up in the fog of a transaction, making the unimportant seem important, and the unemotional seem emotional.

I’ve grown to like the phrases “term setters” and “term accepters.” Simply put, if we lead we negotiate the terms. If we follow we accept the terms. The lawyer fees are much lower when you behave this way.

Originally published at Feld Thoughts.

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