Negotiating with Developers - Part 4: What Are You Negotiating?
Submitted by: Richard L. Treptow

This is a continuation of a series of articles on negotiating with developers.  In dealing with developers, it is important to realize that:

• Different Developers Want Different Things
• Dollars are Not Always the Most Important Factor
• Never Narrow Negotiations Down to a Single Issue

Different Developers Want Different Things

Developers, like people, have different goals.  The owners, board members and CEOs of the companies you negotiate with all have differing motivations, priorities, experiences and pressures.  Gather information on the developer to help you learn what their goals are.  Ask open-ended questions, and ask them to restate their position.  Have your specialists mingle with their specialists (e.g. your financial advisor with their controller or CFO).  Ask what other changes their company is undergoing.  You may be able to determine how your project fits within a broader overall objective.

Dollars are Not Always the Most Important Factor

Don’t assume that maximizing profit or gaining the largest financial incentive is the overriding goal of the developer.  Their higher goal may be to hit a gross sales target, open a certain number of facilities by a specified date, simplify logistics, please major customers, or have a facility close to the CEO’s hometown.

Never Narrow Negotiations Down to a Single Issue

If you narrow negotiations to a single issue, it creates a situation where there will be a winner and a loser on that issue, which can lead to an adversarial situation.  This is the opposite of “Win-Win” negotiations. Keeping two or more open issues on the table creates opportunities for compromises and lets each party to gain on some issues in response to making concessions on others.  Both sides can feel they have gained something valuable as they compromise on items of relative lower value (to them).  In Win-Win negotiations, both sides must feel as if the other side has compromised to meet some of their needs.  This “feel good” aspect of negotiations will set the stage for future successful negotiations and establish a better environment to encourage your new corporate citizen to make a positive contribution to the community.

Look to a future issues of Footnotes for more on the topic of developer negotiations.

To read previous articles in this series, please visit our website at www.umbaugh.com, click on the Newsletters link are look for the following issues: November 23, 2005, December 7, 2005 and March 22, 2006.  

Umbaugh assists many Indiana communities with an entire range of services to support attract, and retain high quality developers.  For additional information, contact us at footnotes@umbaugh.com.