David O. Stewart book “The Summer of 1787” details how after six weeks of deliberating the convention delegates needed to take a break. The delegates empowered “The Committee of the Detail”, five members from among their number to write down all the principles which had been discussed and extend those resolutions into a genuine plan of government. For eleven days, while the majority of the delegates were relieved of the cares of their responsibility, the committee under the leadership of John Rutledge fashioned what would become The Constitution of the United States of America. Upon reconvening many of the delegates scarcely recognized draft document of the constitution. “The Committee of the Detail” had written the deal.
In lease, purchase or merger negotiations the one who writes the deal has a vast advantage. There are many variables that come into play. Two of the more blaring variables are anchoring and exhaustion.
Anchoring is the concept that the first to set the price sets the tone of the negotiations. If the ask price is $100.00, it is unlikely that a $1.00 bid will be attempted. Anchoring sets the floor and theoretically the ceiling.
Exhaustion is the concept whereby the writer of the deal puts in so many clauses that at some point the other party becomes exhausted. Their effort to remove all the extraneous minutiae becomes overwhelming and they agree to the deal as is.
Write the Deal!
