I enjoy studying the art and science of negotiation. A good friend of mine is a master negotiator. He is a thorough researcher so he knows everything about the position of his adversary before he engages in negotiation. He is also patient and unemotional about negotiation. One technique he follows is what I will call the “First Offer” or the “Framework” technique.
This friend tells a story about a time he was working in New York straight out of college. He was assisting with a takeover and the targeted party sent over a term sheet. He was studying the term sheet and making his notes in order to prepare a response when his boss came in and tore up the term sheet. The boss said: “We are not going to use this. This is their framework with their deal points. We will prepare our own term sheet.”
This is a great lesson in making certain that you prepare the first offer. The first offer will serve as the starting point. It will be the “anchor.” All of the negotiations from that point forward should key off of that initial offer. If you are involved in a negotiation, put together your own term sheet and do not bind your client to a term sheet that is offered by the opposing party.