I had a left over stock lot of a product for which I had a couple of interested buyers. Most of them had made modest offers , no one had really made an aggressive push to close the deal. Today, a new buyer came into the picture and after evaluating the lot, made a cash offer on the spot to close the deal. The price he offered was around 20% less than what I think I could have got if I had opened up the bidding to all the prospective buyers. However, this buyer was pretty savvy, and probably took advantage of the fact that the other buyers were not biting, and made a one time cash only offer. I did not put up a real fight during negotiations, and gave in pretty easily I think. The amount sacrificed in this process was not a great deal, however, the lesson I took away from it will hopefully enable me to make more from future deals. Some things I took away from the deal today were:

1. Evaluation Period: Unless the offer made is substantially higher than the true value of the stock it is best to avoid making any rash on-the-spot decisions without evaluating alternatives. During negotiations, emotions tend to take over ,and we end up making decisions that we regret later on. From the closer’s point of view this is the exact position you want the buyer/seller to be in. This is the point of the most vulnerability, and the probability of closing the deal shoots up dramatically. I am a rather impulsive shopper, and do believe this is an aspect I need to work on.

2. Get some Feedback: Bounce the offer with partners or friends who may have some insight into the deal. It is always good to get an outside opinion. Sometimes we get so engrossed with the dynamics of the deal that we lose sight of the bigger picture. It also provides us with some breathing time and space to evaluate the offer, and see whether it is worth pursuing.

3. Do not Over Think it: This may be somewhat contrary to what I have written above, but it is important that we do not let time and an overload of information stop us from reaching a consensus. Sometimes, offers have short windows, and require quick decisions. This is a very effective closing tactic. We are required to expedite the evaluation and feedback process as fast as we can. Today, I could have made a couple of phone calls that may have swayed my decision. If however we overthink things, and take too long to reach a decision, we lose out on value that may be gained from deals with a short time window.

In conclusion there are three kinds of deals. Great deals, where you know you are getting the better end of it, bad deals, where you know you are getting the raw end of it, and the ones that fall in the middle. Dealing with the first two is relatively easily. However most deals will find themselves in the middle segment which is where experience will come into play. I hope my experience today can be of some benefit to readers of the blog who are currently negotiating similar deals.