Study the Counterparty Before Negotiations

Properly assessing a counterparty before entering negotiations is perhaps the most essential step in the sales process. It lays the foundation for everything that comes after. If you rush your analysis, you won't get far. Here are three actionable steps you can take for success in your contract negotiations.

Understand the Counterparty

Your first task is to understand the counterparty's perspective on negotiations, which boils down to two questions: What are they trying to achieve? What are they willing to give up to get it?

If you can't answer these questions, you won't secure a good agreement. You need the insight only possible through thorough investigative work.

To begin, read any available company overviews. You can usually find this information on LinkedIn. Read profiles of key personnel, preferably before contacting them. Browse through news stories, and read the company's press releases, but focus on release dates and the names of those quoted in the stories.

It also helps to view the counterparty as a single entity to prevent overanalysis. When you understand these points, your next step is to address the counterparty's needs by aligning what you'll both give up to secure a deal.

Investigate the Counterparty's Perspective

Looking at what other companies have paid for similar contracts will give you an idea of the market value. If you can't find information about similar deals, use comparable sales to determine the likely purchase price.

Also, investigate what types of deals your counterparty has done in the past. For example, do they usually use competitive bids or sole-source contracting? Do they typically look for long-term contracts or try to maximize their flexibility? Any insight you can gather about the counterparty's negotiation preferences will help ensure your proposed deal better aligns with what they're seeking.

Review the Details Surrounding the Agreement

You should also examine regulatory considerations, legal issues, or other factors that may impact your contract negotiations. Make sure you understand them so there are no surprises during discussions of terms and conditions.

By thoroughly investigating the counterparty, their interests, and the market value of similar deals, you'll have a better idea of what strategy to use when entering contract talks and be able to assess the counterparty's responses to your negotiating offers.

This will help you get a mutually agreeable deal on the table. Don't make a deal without completing this step. If you rush your investigative work, you may not have the information you need to close the deal. As a result, you'll lose time and money. 

Prepare the Contract

Use the same care with the documents as you did with your research. Details matter, and keeping the contract looking great should be an absolute priority. Also, convert PDF to Word to make any final adjustments before sending the final document.

Research, Review, and Prepare

Gather all the information necessary about the counterparty, review the contract details, and prepare the contract with care to win your next round of negotiations.

For more help with business agreements, join your local chamber of commerce.