This is the second in my occasional series on negotiating. When negotiating a term sheet or a biz dev deal it’s important to keep in mind that the end goal of the negotiation is establishing a partnership. This is very different from say buying a house where post closing you (hopefully) have nothing to do with the seller. For a partnership to get off to a good start it helps for both parties to feel good about the process of the negotiation. I have found that an important ingredient is to set realistic expectations about how long it will take you to respond to a new draft or a set of questions. Don’t say “we will get back to you tomorrow” if you already know that your lawyer is traveling and it will take you three days to get back. Large companies tend to be especially bad at this because someone eager to do a deal will forget about the ten other departments that need to be consulted. Often the net result of that are several days of “radio silence." During this time the other side will start to ponder and more likely than not draw all the worst possible conclusions ("they are stalling”, “they are shopping the deal”, “they want to recut the deal”). So try to be realistic in your time projections and if you are running late, communicate the reason. That should be easy if the reason is in fact a benign slip-up – but even then people often don’t bother, resulting in unnecessary radio silence. But what about if you are in fact having second thoughts? Then all the more reason to communicate. Remember, it’s a partnership you want in the end. If you are not sure the deal works get back with your concerns and say you will need more time. The way the other side responds to that will either help move the deal forward and get you comfortable or point out that you were never on track to a partnership. In either case you will have accomplished a lot that radio silence could not.
