If you’re trying to build positive business relationships while also protecting your own interests, it can sometimes seem like a fine line to walk. What if you find yourself negotiating with a new, unknown business partner you aren’t sure you can trust to work for a win-win outcome and a positive partnership?
How do you prepare for potential setbacks or plan for the possible dissolution of the relationship without damaging goodwill?
The Best Laid Plans
Consider that if you have failed to make such preparations, you may then be faced with a situation that could be far more uncomfortable – stuck in a partnership that isn’t working out.
The fact is that even the most amicable agreements don’t always work out the way we hope. Businesses can get into financial or legal trouble that interferes with their partnerships. Management changes can result in a change of direction. Personality conflicts or disagreements can arise. Sometimes parties to an agreement want to make changes, or simply fail to live up to their commitments.
This is why, however friendly and win-win oriented your negotiations are, you still need to safeguard your critical interests – or risk the possibility of major problems in the future.
Your Deal As a Prenup
Think of it this way – most people don’t go into a marriage assuming they will eventually split up, and many don’t even want to bring up the possibility. However, some do take the practical, if somewhat unromantic, step of making a prenuptial agreement. In the event that the relationship doesn’t work out in the long term, having a prenup in place can save a lot of headaches and legal conflict during the divorce process. It’s notable what while nearly half of all marriages do end in divorce, only 5% of divorcing couples have a prenup in place. Isn’t it surprising that such agreements aren’t more common?
On the other hand, contracts with employers, vendors, suppliers, and other business partners aren’t romances. We want our partnerships to last, but we need to be practical about our businesses and our livelihoods. Business contracts should always include “prenup” arrangements – conditions under which either party may reasonably withdraw from the relationship. This kind of provision can keep you from becoming trapped in a partnership that is going south.
How can you ensure that your interests – and your partner’s – are safeguarded in the deal you make? Here are a couple of important steps to consider:
Negotiate a right of first refusal.
This is a guarantee that a party to the deal has the opportunity to match any offer the other party receives later from a third party.
For example, if you are supplying materials to a manufacturer and another supplier tries to undersell you, this clause will ensure that you have the opportunity to match their price, if you can, before your partner makes a new deal with your competition. It’s good for you because you can potentially prevent the loss of your buyer – and good for them because it still affords them the chance to get the best price.
Stipulate conditions under which the business partnership can be dissolved, and a procedure for doing so.
Preparing for the eventuality that one or both parties may want out at some point may seem pessimistic, but is really just facing facts – nothing lasts forever, after all, and there is a wide range of unpredictable events that could affect the state of your relationship.
Most employers have a protocol for letting employees go and for allowing them to resign, because they recognize the inevitability of employee turnover. Similarly, you should include an exit clause that allows for each party to get out if they have a legitimate need to do so, the conditions that must be met for this to be an option, and the steps that should be taken to dissolve the relationship – ideally without resorting to legal proceedings.
Just make sure you think through all the details and make an agreement that is fair to both parties. As long as these safeguard arrangements are evenhanded and fair, they can actually contribute great value to a win-win deal!
Baker Communications offers leading edge Negotiations Training solutions that will help you address the goals and achieve the solutions addressed in this article. For more information about how your organization can achieve immediate and lasting behavior change that leads to bigger wins during negotiations in any setting, click here.
