Over 30 years ago, I took a continuing education course in New York City (don't eat the chili) on negotiation. I ran across my old notes last week and decided to clean them up and share them with you. In a nutshell, it is a how to on beginning a negotiation.
Remember that these are only the most elemental concepts!
1. Negotiation is NOT a competition --where one side wins. A Negotiation is a beautiful dance, the building of a relationship could end in financial and other benefits for both partners.
Did I just say "partner?" Well, there is a reason. This dance card gets punched by the landowner contributing the land asset and the oil company contributing the economic risk and the professional expertise.
Don't sell yourself short. You are invited to the table for a reason. If you feel overmatched, listen twice as much as you talk, do not commit to anything and get some help. Set the negotiation table correctly by following the below suggestions.
2. Understand completely their goals and more importantly, your goals.
I make a list of my "want to haves" in a negotiation and have stars by my "must haves."
As best you can, do the same thing for the other side. This is tough if you have never had their job. Reading about being a landman is a long way from being a landman for a career that spans decades.
When I negotiate for another, at some point, I will find out their "walk away number." The deal killer. And if needed, of course I will share it with the other side as a Hail Mary to close the transaction.
3. Prepare, prepare, prepare (oh, prepare a little more)
Gather all information, scraps of intelligence,etc that you can. Remember to always assume that they know more about their business than you do.
4. Listen and ask questions
Listening and asking questions does more than just gain intelligence. It builds trust on both sides. When you intently and actively listen, you show them great respect.
5. Be cool
This used to be my problem. I found out that when I was green and inexperienced, I knew of only one way to go -- aggressive. I took at least two seconds to change that tact.
If you take nothing else away from this, know what your goals are and direct your strategy to that and not the other person’s behavior. You have to play the negotiation your way to maintain control. Do what the Chinese do. The more heated things become, the softer your voice becomes. Then they are forced to listen.
6. Bend --Do not break
This may be the most important one of all. My business card says "Oil and Gas Remediation" instead of landman, land manager, etc. Remediation means to provide a remedy. That is what I try to do when thing are not going just right. Find the remedy. Find the solution. The best compliment that I ever received in a pretty high level negotiation was when the lead counsel on the other side asked if I was a mediator or a landman. He understood where I was coming from and we all walked away satisfied.
Things to Remember
- It is imperative to know what their goals are. Getting a lease is just not enough depth for a successful negotiation.
- Remember your own value — you are there for a reason,
- Ask questions — you’ll get valuable insight into their motivations and interests
Don’t ever
- Wing it — nothing beats good preparation and business intelligence
- Depend on a single strategy — develop a range of responses to push the negotiation in your favor