Would you “split the difference” if two people’s lives were at stake? My guess is no. Yet, in a business world, “splitting the difference” is the fallback solution that the parties seem so eager to come down to. Honestly, I cannot think of a single situation in my life when having “split the difference” felt like winning. If you haven’t gotten what you wanted, and neither did the other party, isn’t it more like giving up and settling for less? What if you took the “split the difference” off the table completely? How would your outcomes change?
While there is a myriad of negotiations trainings and approaches, there is hardly anything more powerful than the skills the FBI uses to negotiate hostage situations. After all, you can’t split Aunt Mary in half, and U.S. government doesn’t like paying ransoms. So, if the special agents can get the irrational bandits to release the hostages without giving away anything of importance, couldn’t we, smart business people, steal a few tricks out of their playbook?
The closest we can get to that playbook without actually applying to Langley is a book by former hostage negotiator Chris Voss “Never Split the Difference”. Despite the assertive appearance, the book’s main message is that you can get what you want from another party without the dreaded arm-twisting game of wits. The better approach is quite easy to learn and to apply. Definitely give it a try if you are interested!
As syndicators, you are constantly negotiating. Negotiating with investors to get them to invest. Negotiating with asset owners to buy for your fund. Negotiating with vendors to get the best price. Even negotiating with your syndication attorney to balance your needs as a syndicator with the rules for compliance when drafting a Reg D private placement memorandum.
The book outlines a lot of strategies and techniques.
Here are just a few nuggets I got for my own negotiations skill set:
- Focus only on the best outcome scenario and write it down. Taking the bottom line out of the equation, makes it less appealing to settle for less in order to stop the discomfort of the negotiations process. To keep yourself accountable to holding the line, share your goal with someone you respect – peer pressure in reverse.
- People tend to treat the opposing party as the “enemy”. In reality, both parties are looking for the solution to the same problem, so the situation is the enemy, not the people.
- Empathy is the big muscle behind successful negotiations. Get on the same side with the other party, negotiate in their world. How do you do that? By describing the situation at hand by labeling it. A good example is an “It seems like…” language. “It seems like you are really questioning selling this office building right now”. Then PAUSE. Let them explain their objections. The better you understand the reasons behind their reluctance, the better solutions you can offer instead.
- How do you know if you are speaking their language? If their response to your labeling is “That’s right” – bingo! They know you are listening and understanding, which also means you are much closer to an agreement than you were before. On the other hand, getting a “You are right” response is not a good thing – you are in the place of an authority and people get resistant to moving forward on the agreement.
- Get as many “No’s” as you can get. No is a power word that helps the opposing party feel more in control, instead of trying to defend their positions.
- Get the worst out of the way ahead of time. Their unspoken fears/concerns and judgments about you or the situation is that “behind the scenes” heckling voice that will keep the negotiations from progressing. Think through these possible accusations and put a lid on them by bringing them up first. In a situation where you are negotiating a purchase of a building, sentences like “It seems as though you think I’m here to take advantage of you” will help the seller get these unspoken thoughts out of their head and be open to further discussion.
- Send this genius one-line email if negotiations are stalling (thanks, Chris Voss!) “Have you given up on this project?”. People really don’t like when it feels as though they are about to miss out on something!
- Use a range of numbers. This one is truly a powerhouse. Instead of quoting your $2.52 psf, refer to a higher range elsewhere: “Top places in the building next door are leasing in the range of $2.60 to $2.95”. This sets the bar high and gets them thinking of even more expansive options out there.
- If you are feeling under attack, stop and pause. Use calibrated questions that get them talking: “How am I supposed to do that?” and “How can I help to make this better for us” will get them working on finding the solutions.
- Don’t ask “Why?”, it sounds accusatory.
- Use unusual numbers in your offers, like 1,251,799. Somehow they seem substantiated a meaningful to the other party.
- Avoid emotional escalations and keep negotiations positive and friendly.
In the last week’s article on tenants’ creditworthiness, I’ve outlined steps to help landlords and property owners analyze their unique situation and how much risk they can take with every tenant they accept or choose to pass on. The argument towards a lesser offer could always be that your bottom line needs the cash flow.
The truth is that negotiation is a process that requires the willingness of both parties to come to a mutually agreeable resolution. Know your bottom line. If the other party has gone beyond the point of your comfort level, be ready to walk away. Keeping yourself at the mercy of a tenant or business counterpart that goes against what you believe is right or fair, is not going to produce a good outcome. Find strength in your loyalty to your own truth – when you know what you are worth, the other doors will open to a better solution.
Tilden Moschetti, Esq., is a highly sought-after syndication attorney with nearly two decades of experience. His clientele ranges from real estate developers and startups to established businesses and private equity funds. Tilden’s expertise in syndication law comes not only from his knowledge of syndication and securities law but from real, hands-on experience as an active syndicator himself in every real estate product type and nearly all markets in the US. His knowledge and experience set him apart and established him as the Reg D legal services leader.
