Edited by: PON_Staff, filed in: Business Negotiations, Daily, Financial Negotiations, Negotiation, Personal Negotiations
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Adapted from “Create Value with Matching Rights,” first published in the Negotiationnewsletter.
The problem: You and your counterpart have different ideas about how much freedom you should have to negotiate with others and/or how long your agreement should last.
The tool: Matching rights (sometimes known as rights of first refusal) are a contractual guarantee between negotiators that one party can match any offer the other party later receives for a given asset. Once the exclusive domain of high-flying mergers and acquisitions specialists, matching rights are now common in many contexts, including procurement, real estate, and investment deals.
How it works: Suppose that a small-business owner is negotiating with a landlord over office space. The business owner wants the stability of a long-term lease, and the landlord wants greater flexibility. They can both meet their goals by adding a matching right to a short-term lease. When the lease expires, the landlord (the “grantor”) will be able to negotiate with other prospective tenants, and the business owner (the “right holder”) will have the chance to match the best offer from a third party.
What it can do: Inexpensive to give and valuable to receive, matching rights can be a negotiation no-brainer. By granting a matching right, you demonstrate your flexibility and goodwill. When you hold a matching right, you gain the opportunity to outbid a future competitor.
See more at: http://www.pon.harvard.edu/daily/business-negotiations/expand-the-pie-with-matching-rights/?mqsc=E06/29/10+7:30+AM
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