22. Shut the door to catch the thief

It is often useful to confuse your opponents and even you customers in order to gain what you want. The thief in this stratagem is anyone who may not do what you want them to do and instead steal away to one of your competitors.

If you are about to enter a lengthy and potentially expensive negotiation it is normal to agree ground rules about the type of information that will be provided, confidentiality, timescales and who will be involved from both sides. As negotiations progress you may sign off Heads of Agreement prior to signing a final agreement. If you are selling or buying it is worthwhile inserting clauses requiring both sides to act professionally and demonstrate commitment to the process. These clauses appear innocuous but can be useful if negotiations lack progress.

I advised the owners of a company on its sale to a large corporation. We negotiated a confidentiality agreement with the corporation before we would disclose sensitive information. I insisted they guaranteed a large fee to cover our costs of providing all this information as part of their due diligence activity, this fee would be offset against the purchase price if they completed the purchase. The fee had the effect of “bolting the door” making it very expensive for them to withdraw – they completed the purchase.