Q & A Table of Contents
But I Thought We Had A Deal!
From: Steven, Sydney, Australia
Question: I am an international mergers & aquisitions/property consultant.
A major property developer provided me with a letter several years ago and 'confirmed that they are prepared to pay me 4% on any deal which is consummated as a result of my endeavours'.
Over the years I have presented several development opportunities to them, they paid me for those opportunities which have been taken up, and others have been rejected in the first instance.
Recently I was informed via associates that a property which was introduced by me and upon which I undertook due diligence on instructions some two years ago, which was rejected at the eleventh hour when they decided 'not to buy at this time, maybe later'. They decided to revisit the opportunity some two years later via direct contact with seller after which they consummated the deal without my knowledge. I feel that I have a claim for services rendered based on letter signed years ago. I wish to negotiate this matter based on principle. Any suggestions?
Response: Before you undertake negotiations you need to have as clear as possible an understanding of your BATNA, your Best Alternative To a Negotiated Agreement. In this case that would include your legal rights, your current and possible future relationship with the property developer, your reputation in the business, how possible outcomes may have an impact on your business with other clients.
You also need to consider the interests/objectives, perceptions, and motivations of the property developer. Are they simply trying to deprive you of your fee? Is their corporate memory sufficiently faulty to have forgotten your initial work on the project? Did you do everything you should have subsequent to your initial work to keep the property developer aware of your involvement in the deal? In the developer's ultimate decision to go forward, did they refer back to or rely on any documentation you had provided during the due diligence process?
Once you have as much of this information as you can get, if it is clear the developer has acted in bad faith, you need to reach a conclusion on the possible impact of any action you take on your future with the developer and with other clients. Unfortunately, even if your legal rights are clearly favorable, often the practical consequences make enforcement using legal means unappealing.
On the other hand, after having undertaken the preparation described above, you should have a better idea of what sort of resolution will satisfy you and be acceptable to the developer. With this in mind you can approach them and ask them a series of open-ended (not 'yes or no') questions to get as clear an understanding as possible of their interests as regards the outcome. Are they concerned with having a reputation as a firm that sticks knives in the back of consultants? Do they feel, can they demonstrate that circumstances have changed that made your initial work of no relevance to their ultimate decision to go forward? Is there a compromise result that will allow each party to save face -- and walk away with an acceptable financial settlement? Can this situation yield lessons for both yourself and the developer for your future behavior, contracting practices, and ongoing contact during the pendency of a possible deal?
In some ways you may feel as if you are caught between a rock and a hard place. However, by doing a good job of preparation for the possible negotiation you will be in a stronger position -- and you will have learned good habits for future business activities.
Good luck,
Steve
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