The Role of Power in Negotiation

Surefire Negotiation Tactics

Surefire Negotiation Tactics

Shockingly Simple But Powerful Negotiation Strategies Save The Ordinary Joe Thousands Of Dollars Of Foreseen Expenses. Discover How You Too Can Save More, Keep Under Your Budget, And Make More Money With These Simple Negotiation Tactics You Can Apply In Any Business!

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20 Negotiation Tactics

This 70 minute video gives you access to a whole new world of negotiation techniques that you probably have never thought of before. You will learn the psychology of how people make choices, and how you can leverage those choices into your advantage in a negotiation setting. All of these tips were chosen because of how widely they can be applied to all kinds of situations. You will also get 50 real-life examples to use in your own negotiations, so that you can learn to never be taken advantage of. All we need is 70 minutes of your time, and we can have you negotiating like a pro, to be able to have people see your way, no matter what you're proposing. All of these tactics can be applied in many different settings, such as asking for a raise, getting a job, or even winning an argument! All these tactics can change how people view you, and give yourself authority!

20 Negotiation Tactics Summary


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Know What You Want before Negotiations Ever Begin

Never lose sight of that fact that your two main objectives when negotiating with property owners are to buy a real estate option at a price that is 5 percent or less of the property's current market value and to purchase the property at a price of at least 20 percent or more below its fair market value. And as a negotiator, I know what I want, and I know what I am willing to give to get it before negotiations ever begin. For example, before I ever sit down at the negotiating table, I already know

Be Flexible in Negotiations

Be flexible in the negotiations, but firm at the same time. Does this sound like a contradiction It is not. The idea is to decide where you want to be flexible and where you want to be firm. If the deal is all cash, then you are closing the options you are giving the other party and the only place where there is any flex left is in the price. This is, in my opinion, a bad stand for a seller, as it places him or her in the tightest of all boxes to make a deal. Naturally, this stand must be taken at times when cash is the only way out, and there is no way to generate that cash from some outside source. But, the fact of the matter is there are so many options open to buyers to give sellers cash and yet keep their own out-of-pocket cash investment at a minimum that it is folly to assume that all cash to one party means all cash paid by the other.

Negotiations Falter

Progress in the plan negotiations was interrupted when Price Waterhouse presented its year-end audit of ATEC's 1997 results to a meeting of shareholders on February 27, 1998. It recommended that ATEC record a net loss of 15.4 billion baht ( 381 million) for the year in dramatic contrast to the profit of 452 million baht reported in 1996. PW believed the company needed to take write-offs and write-downs totaling more than 11 billion baht against accounts receivable, loans to directors and related companies, unusable fixed assets, and falsified inventories.

Knowing When to Pull the Trigger

What can be done to encourage companies to restructure sooner rather than later In the case of United Air Lines, management in effect created a crisis that made employees more willing to compromise. Early in the negotiations, management threatened to break up the airline and lay off thousands of employees if a consensual agreement could not be reached. Management made the threat real by developing an actual restructuring

Management Challenges

Points in the negotiation typically concern how much value each class of creditors will receive (as a fraction of what they were owed), and what form (cash, new debt, new stock, etc.) this value will take. In the background of the negotiations, management must also be watchful that the new capital structure does not contain too much debt in total. And it needs to address any problems in the firm's business. These are often difficult challenges to meet.

Chinas Trade Commitments

International economic cooperation has brought about this defining moment in the history of the multilateral trading system, said Mike Moore, WTO Director-General, at the conclusion of the meeting of the Working Party on China's Accession.1 As a result of the negotiations, China agreed to undertake a series of important commitments to open and liberalize its economy and industries. As a result, China will offer a more predictable environment for trade and foreign investment in accordance with WTO rules. A WTO news release at the conclusion of negotiations stated that some of the commitments undertaken by China are the following

Enhance the Value of a Property

The term value is relative to the goal one wants to attain. From the seller's point of view, the financing that attains the seller's most important goal works best and establishes the highest value even if the monetary amount is less. If the seller needed to attain the highest possible market price for tax or other reasons, the terms the seller provided to the buyer may soften the economic impact to counterbalance the high price. This could occur by a lower than market interest rate or another condition of the payback. Because the concept of best value is likely to differ between the parties, the method of financing used often helps bring the two parties together to maximize mutual benefits. The compromise aspect of negotiations is enhanced when each party has a wide range of options to view.

Opportunities to add value

Although you may not know much about investing in the stock market, you may have some good ideas about how to improve a property and make it more valuable. You can fix up a property or develop it further and raise the rental income accordingly. Perhaps through legwork, persistence, and good negotiating skills, you can purchase a property below its fair market value.

By Currency Trader Staff

FXCM pulls plug on Refco negotiations On March 20, spot currency brokerage Forex Capital Markets (FXCM) announced it had ended negotiations with the creditors to acquire the assets of Refco F X Associates, the unregulated currency trading arm of bankrupt clearing firm Refco. While our hope remains to effect a transaction, the creditors' demands remain unreasonable and their position inflexible, the press release quotes FXCM Chief Executive Officer Drew Niv as saying. They leave us no choice but to abandon negotiations at this time. Despite the fracture, FXCM's announcement seems to leave open the possibility of future negotiations.

Can you deal with problems

Challenges and problems inevitably occur when you try to buy a property. Purchase negotiations can be stressful and frustrating. You can also count on some problems coming up when you own and manage investment real estate. Most tenants won't care for a property the way property owners do.

The Private Placement

Private placement investments, in fact, consist of anything that is not a public offering. Such leeway lets money-raisers exercise the limits of their creativity and negotiating skills. Herein lies the strength of the private placement, and the main difference between an institutional private placement investment and direct, participatory investment by an angel. The former is primarily debt the latter is not. A private placement usually means a subordinated debt transaction in the institutional market, but for angels it usually means an equity transaction between an individual and the company, a transaction that brings with it several advantages and responsibilities. The private placement offers flexibility during negotiations between the private investor and the entrepreneur, a flexibility unavailable when purchasing stocks of public companies. Don't forget, in the case of early-stage ventures, that the company, its management, and strategy, even its technology, are unproven. From...

Part Three Mergers Acquisitions Chapter

Part Three focuses on the key process points and stages for running an effective M& A sale process, the medium whereby companies are bought and sold in the marketplace. This discussion serves to provide greater context for the topics discussed earlier in the book as theoretical valuation methodologies are tested based on what a buyer will actually pay for a business or collection of assets. We also describe how valuation analysis is used to frame the seller's price expectations, set guidelines for the range of acceptable bids, evaluate offers received, and, ultimately, guide negotiations of the final purchase price. Chapter 6 M& A Sale Process The sale of a company, division, business, or collection of assets is a major event for its owners (shareholders), management, employees, and other stakeholders. It is an intense, time-consuming process with high stakes, usually spanning several months. Consequently, the seller typically hires an investment bank (sell-side advisor) and its...

Basis of the Transaction

Assume that your long- term goal is to establish a steady income at the end of a 15-year period and that the apartment complex will fill that need by paying off its debt by then. Once the total goal is seen, visualized, and written down, you can move deeper into the basis of the transaction in preparation for your negotiations. One of the next stages is the review of options open to you to meet this goal. How many apartment buildings have you seen Where do you want your apartment building to be Each move toward the end result will take you deeper into more alternatives that can sway you from your intended path. It is important that you be flexible so that as you move into this jungle you won't overlook the fact that other pathways that present themselves to you might improve your chances of realizing your goals. However, do not let the greener grass syndrome take you into an ambush by the local natives (brokers or other sellers). Many a would-be investor has lost his or her head over...

Review the Alternatives

Look at and examine the alternatives. If you have an effective comfort zone system in place, you will know the marketplace and focus on what works for you. It is this thought process that has led you to this property in the first place. Still, you will want to ask yourself these questions prior to entering into negotiations

When the Rents Seem Unreasonably High

Sometimes you can get an idea about who lives there by checking out the cars after dark. When I feel that negotiations to purchase a property are going my way, I spend more time driving by and observing what goes on at the property. The word that best describes how I conduct these observations is sneaky I don't bother calling ahead for a formal visit. You can't find out what's really happening at the property unless you snoop around.

Why Does the Other Party Want to Buy or Sell

Much of the homework you do is a matter of being aware of what is going on around the transaction. That information must then be tied into the form of negotiations you devise to meet any objection that stands in your way of successfully concluding the transaction. Other parts of the homework fall into the comfort zone that we have discussed in earlier sections of this book. So far, each of these two tactics is a question of awareness and comfort. The facts are often public knowledge and easy to obtain once you know how to find them.

Know the Timing of the Transaction Better Than the Other Party Does

In negotiations with a loan officer, there are some important facts to know. These include the time periods for submission to loan committees, quotas that the loan officer has to meet, and other time traps that affect you in your need for money. For example, a 90-day delay while your credit is being checked, or the 90-day down time to have an appraisal made when you only have 60 days to meet some contract provision to keep your deal alive can be disastrous.

Understand the Essence of Negotiation

Communication becomes a step to understanding any form of negotiation. Like an argument, it is very difficult to have lasting problems if there is no communication. It is the same in negotiations. It is better to have no communication at all than to have no understanding, or bad communication. But, you must get your point across. You do that by demonstration more than by talk. Talk is the murderer of negotiation.

Building Trust Is Building A Network For Success

In the real estate field, success tends to be related to fair dealing. Much of what really goes on between the people who will help you occurs without contract, and without obligation, because all of us need people we can trust. So you will spend much of your business life finding out who you cannot trust and therefore cannot deal with. Some of the difficult-to-negotiate-with people are just frightened or unsophisticated men and women who are in trouble and don't know who to turn to for help. These people don't want to appear to be frightened or unsophisticated, so they delay, balk, or just become uncommunicative. You may batter down those kinds of doors, but it can be a very slow and unpredictable process. Sometimes the best negotiator has to throw in the towel and give up. If you do enough deals, there will be some failures. The key to the failures is to size up the deal as soon as possible and not waste time in closing down the negotiations. Just remember to do so without burning...

Who Are Public Pension Fund Stakeholders

A second stakeholder group is the government, which has an interest in the administrative costs of running the plan and in the performance of the plan's assets, as these factors influence the amount of the government's contribution for DB plans. As an employer (in the case of civil service plans), the government is interested in the financial health of the plan for its impact on the ability to recruit new employees and retain existing employees (Mitchell 2002). In addition, the financial health of the plan can have an impact on pay and benefit negotiations with employee representatives. The government, however, may desire to use the plan's assets to further other government objectives, such as making investments to help the local economy.

Maximum Leverage May Not Be Possible in All Situations

Maximum leverage may not be the most advisable option either. The options available to the buyer or to the seller in the actual structure of the deal are limited by the circumstances and the goals of both parties. In the give-and- take of the negotiations, each party may give in to some demand of the other party. In addition to these demands, the lender may require some changes in the overall deal. It is generally the buyer who is the t ender's target, and buyer's flexibility is increased tremendously when the lender is the seller.

How to Meet the Seller When Submitting Your Offer

1 Limit your offers and negotiations only to for-sale-by-owner property that isn't listed with an agent. This is the simplest way to make sure that you connect directly with the seller (and a method we've used extensively when guiding our mentorship students to buy single-family houses), but we don't recommend it as the only method. Why Because most of the commercial properties that you'd want to buy are probably going to be listed with a real estate agent.

Dont Play Games if You Want Real Benefits

When your offer is considerably less than the asking price and you can't explain why, it becomes very difficult to keep negotiations on a productive level. It's sort of like saying to the seller, You really don't know what your property is worth, but I do If you mean it that way, you need to be in a position to tell the seller why. Don't win the negotiations and lose the bargain. I've known buyers who have done quite well at persuading sellers to reduce their asking price, only to find out later that the price was still too high. If negotiating is to serve a valid purpose, that purpose must be to make the deal workable for everyone. It should not be a contest to determine who can have his or her way the most otherwise, you'll end up like the little Boy Scout who cut the rope three times and it was still too short.

Your Chief Negotiating Tool

My chief negotiating tool is my income property analysis form. It's a simple form that develops a financial picture of the property I wish to purchase. It shows the financial situation of the property and approximately how much it will cost to operate the property. It also helps eliminate much of the emotion from negotiations. (The previous chapter explains this.)

Taxes laws and reputation

Taxes, the legal system, and reputation are sufficiently important topics to an investor to justify the cost of an attorney representing his interests in the structuring phase of the fund. Since the aims and ends of investors can clash when more than one large seeding investor is involved in the setup phase of the fund, it requires diplomacy to be able to ride the waves of the various competing interests without endless delays or, in a worst case scenario, the complete breakdown of negotiations. In a best case scenario, the sponsor will find individual solutions for each problem but it might not always be possible to accommodate all parties' needs and compromises will be necessary.

Note on the Setup of a WFOE

During negotiations, the establishment of a WFOE should be made conditional on the selected development zone assisting in obtaining all the necessary permissions, licenses, and approvals. Such processes are quite tedious, however, and it is essential to secure the best terms available. Although a fast track is possible, the process will normally take around six months.

Basic Restructuring Dptiohis

Investing in distressed situations involves purchasing the financial claims of firms that have filed for legal bankruptcy protection or else are trying to avoid bankruptcy by negotiations and out-of-court restructuring with their creditors. In the United States, corporate bankruptcy reorganizations take place under Chapter 11 of the U.S. Bankruptcy Code. Firms that liquidate

Participants In The Reorganization

These included claims secured by a range of assets, including real estate and inventories. While the particular security of each claim was often different, Van Horn thought that as a first approximation it was possible to treat these claims as a single group. These claims totalled 159 million of which approximately 90 million were represented by claims held by the company's banks, including NCNB Texas ( 57 million credit line), NCNB North Carolina ( 25 million ESOP loan), and Bank of America ( 8 million letters of credit). Insurance companies and other lenders together held the bulk of the balance of these claims in the form of mortgage loans. Van Horn was aware that NCNB Texas had exposure in at least two of NCS's competitors that were also undergoing Chapter 11 restructurings. He knew that this exposure, and the bank's somewhat pessimistic views on NCS's and the industry's prospects, would influence NCNB Texas's attitude in the upcoming negotiations.

Most Common Uses Of A Wraparound Mortgage

The seller in such a situation may offer the property with a reduced equity right from the start. The seller quotes to his or her broker a price and terms that include a single mortgage. At this point in there is no need to explain that a single mortgage is really a wraparound mortgage. Say, for example, in a 500,000 property with 400,000 equity, the seller offers the property at the 500,000 price subject to an existing mortgage of 300,000 and a down payment of 100,000. This increasing of the loan-to-value ratio will benefit the negotiations. As the buyer approaches the close of the sale, full ramifications of the underlying mortgages encompassed by the wraparound will, of course, be disclosed. The first examination, however, need only show the higher wraparound.

Cheap Price for Freedom

One was Ferenc Bartha, who at that time was responsible for the government's economic relationships. When Bartha and Soros met in 1984, Soros explained that he was interested in establishing a philanthropic foundation. Negotiations ensued. Conducting them for the government was George Aczel, the only Jewish member of Hungary's Politburo, and the unofficial cultural czar of Hungary and confidante of Prime Minister Kadar. In other words, the Hungarian government was now insisting that the new Soros foundation fall within the purview of the Ministry of Culture. To the shock of the Hungarian negotiators, Soros rose from his chair and walked to the door. He would not sign the documents.

Consider Trade Offs between Lease Terms and Purchase Price and Terms

Leaseback negotiations can jockey back and forth between the price to buy and the amount of rent the seller, now tenant, will pay. The buyer has a targeted investment yield that he wants to achieve. However, these targets have a range of terms that will work to that goal. Frank, as a seller, knows that his pro forma must work if he is going to sell franchises. Future store operators do not want to be saddled with excessive rent, and they will need to be able to find locations for their new franchise stores that also fit the pattern of the original franchise store.

Setting Up The Saleleaseback

There will be some flexibility in the adjustment of these two values. This adjustment may have tax-- aving results. For example, if the seller has a low base, it may be possible to set a price that is near that base and reduce the rent the seller will pay in the leaseback to offset the reduced price. Remember, the lower the rent paid by the seller the higher the value of the leasehold. Naturally, you cannot reduce the price to a point that is below the market value just to save on taxes. However, there is usually ample room in which to work in order to provide some flexibility in these negotiations.

Negotiating a Lower Price

This occurs because the buyer recognizes that he or she is buying at a good price and can adjust income accordingly. The buyer should realize that reduced rent and soft terms for annual rent increases increase the value of the leasehold interest for the tenant. These terms may be required to get the tenant in the first place, and if that is the case, do not reduce the value of the property. However, very long terms that favor the tenant can have a great effect on future appreciation of the owner's interest. Yet, from the initial point of view, if the tenant has a high equity in the leasehold, the owner of the property will be more secure in the transaction. This can be a very important tradeoff in the negotiations of a long-term lease. For this reason, early concessions that entice the tenant into the property can pay off later. In the sale-l easeback, the concessions are part of the negotiation in the transaction. Assume the seller (and soon-to-be tenant) is asking 500,000 for a...

Investment Banking Fees And Valuation

The agreement may prohibit the disclosure of negotiations by either buyer or seller. The selling company will try to control a bidder's ability to discuss the possible transaction with other potential acquirers. If the target is a public company, the contract typically contains standstill provisions setting the terms under which the bidder may acquire, vote, or dispose of target stock. A potential buyer with separate trading and investment functions, such as a securities dealer, may request that some of its units be permitted to continue trading in target stock without violating the standstill provided that trading and merchant banking divisions are separated by an information barrier between them (or a Chinese Wall).

Quick Turning or Flipping Strategy

After starting negotiations with this prospective buyer, John asks, What's the absolute most you would pay for this Can you do any better Can you do any better Can you do any better The investor replies, Instead of 52,000, I can afford to pay 54,000. John returns with, I was really hoping to get 62,849. The prospective buyer says, This is my last offer. I'll pay 55,000 and spend 20,000 fixing it. I'll have 75,000 in it, sell it for 105,000, and make between 20,000 and 25,000.

Negotiating And Structuring The Deal

Venture investor Anthony Perkins is quoted as saying, If there is any guide to structuring investments, it is to isolate whatever the biggest risk is in a deal, and structure the initial investment so the money is used to eliminate that risk. In the new capital-raising reality facing entrepreneurs today and for the immediate future, be confident that investors have altered their investment approach from the boom times of 1999-2000. Whether in response to investment losses incurred, or for other reasons mentioned, investors now place a premium on risk management, hedging strategies to minimize the downside, and co-investment strategies to share the risk. As investors pay more attention to due diligence, aggressive valuation negotiations to establish pricing and stricter deal terms have become the norm. Certainly, for early-stage companies seeking private equity financing, terms, or the key covenants in investment contracts, have changed.

Dont Fear Run Down Properties

Thoroughly check out the entire property. Carefully analyze it. Then accurately evaluate the selling price that you could get after you've completed your fix-up work. If you've worked the numbers and the total costs of purchase and fix-up exceed your probable resale value, don't necessarily abandon the project. Go back to the troubled owner (or mortgage lender) and reopen negotiations. Point out that you must make a reasonable profit. If still you're unable to arrive at a good deal, then look elsewhere.

Definition Of Negotiation

Negotiating begins after due diligence, and only when the investor has decided to go forward. At this stage, the entrepreneur needs to negotiate the structure of the deal and work through development of an agreed-upon preliminary understanding into legal documents. The parties will have to decide on an array of issues. Commonly, such negotiations are between the lead investor and the entrepreneur. Remember, investors will be motivated to secure terms and conditions to protect their financial downside by negotiating an agreement that allows investors some degree of influence and control in decision making. Following are negotiating guidelines for entrepreneurs

Using an Exchange as a Selling Tool

Then an offer to take some vacant land as a major part of the exchange was presented. The land was free and clear of debt and the owner wanted us to hold a sizable first mortgage to balance the equity. After some negotiations I was able to entice the buyer to add some cash so that my partners and I could recover most of our original investment at the closing. This offer came from a highly qualified buyer who thought of himself as an exchanger. Through heavy and long negotiations for more than four months (nothing else was happening on the property anyway), the deal was concluded. The exchanger saved face by reducing the amount of vacant land he would give me, and increased the cash and mortgage portion of the deal. What started out as an exchange with no cash ended up as a lot of cash and very little exchange.

Look for Property That Has Been on the Market for a While

Important The seller's asking price is the seller's first offer. In this market, a seller is just praying that somebody will buy. In the current real estate market, Barry Miller, a buyer's agent in Denver, suggests that your first offer should be somewhere around 15 percent below the seller's asking price. (And that advice applies nationwide, not just in Denver ) You may end up having to pay more, but that's a good starting point for your negotiations.

The Grass Always Looks Greener On The Other Side

Etch into your mind never to make a comparison between two events or circumstances when only one is available. Sellers fall into this trap by making a direct comparison with the actual terms of a contract, as they would compare to what the seller wants. Ryan offered a price that was acceptable, a lot of cash (from the bank of course), and a second mortgage. He did not give the seller the option of taking cash instead of the mortgage. Buyers fall into this trap too, and get hung up on what they want. Ryan wants to purchase this property for the above -s tated terms. If there is no flexibility in his negotiations, he might have the property slip by. Likewise, if Ryan did not know about the pyramid he might try to get the seller to hold the second against the property being sold. Sometimes this works, but when the loan-to-value ratio is close to or at 100 percent, the normal secondary mortgage usually is not acceptable, and sellers know it. If the seller balked at the terms, Ryan might...

Cyprus A Model Eu Student

The lack of resolution to the Cyprus situation provides ongoing political uncertainty. After the failure of the last April's referendum, in which the Turks said yes and the Greeks said no, prospects for future unification remain unsure. The referendum was based on a UN negotiated plan which proposed a two-community federation with a limited federal government. Unfortunately, the economic aspects of the UN plan were among the least detailed and many Greek Cypriots worried about paying the costs of unification. Yet the lack of settlement produces several paradoxes, while Cyprus acceded to the EU as a unit, the government does not have control over the northern third of the country. So technically, northern Cyprus could export to the EU, but there are no approved ports for shipping and there are concerns about the liabilities since the Republic of Cyprus is the only recognized government. The recent compromise selection of a start date for Turkey's accession to the EU shows that these...

Promoting Trade And Investment Across The Mediterranean In Whose Interest

The US relationship with the southern shores of the Mediterranean is focused on relations with individual countries within the framework of encouraging Arab state relations with Israel. In December 2004, eight years after negotiations started, the United States and Israel recently concluded and signed a modified free trade agreement with Egypt. The goal of this newest economic agreement is largely political, that of increasing cooperation between Israel and her Arab neighbors. The agreement follows a similar one with Jordan, which later led to a full-fledged free trade agreement. Goods produced in these zones can be sold duty free in the US as long as they contain 11.7 Israeli products. This new agreement will promote Egyptian-Israeli economic cooperation, and is seen as the best means to preserve and enhance Egypt's access to the US textile and clothing market. When existing quotas are lifted in January 2005, it is expected that large Asian producers will swamp the market, closing...

Showing intention with an earnest money deposit

Right after the purchase price, one of the most important terms that can set the emotional tone for further negotiations is the amount of the earnest money deposit you're willing to submit with your purchase offer. The earnest money deposit is usually fully refundable for a defined time period. Your deposit is held in trust by either the seller's agent or a title or escrow company. Never make an earnest money deposit payable directly to the seller.

Mums the Word Dont Tell Sellers Your Plans

Beginning investors, especially, tend to reveal too much of their plans for a property. To gain a bargain price, don't turn your cards so that the sellers (or their sales agent) can see them. If you explicitly question the sellers in ways that reveal your value-creating ideas, the sellers will likely use that potential to strengthen their own negotiating position.

Leaseback Buyback Recapture Or Option Become A Necessary Part Of The Discount Sale

If the seller has a use for the property and can produce income to pay the lease, the reasons to lease back the property may be sound. With the discount off the sales price and additional income (in the form of rent), the transaction may entice a buyer, and the transaction proceeds to close. The amount of the lease payments can usually be lower than an economic return on the price, as the buyer is looking at the discount as the major incentive for buying. This is another flexible aspect of this form of financing. You can negotiate different time periods of the lease, amount of the lease, and discounted prices. The variance on any one could be advantageous to one party and not the other. A balance of these variations may be necessary in the negotiations on this kind of transaction.

Technological Advances

At the start of the nineteenth century, merchants operating on opposite sides of the Atlantic were separated both in distance and, because communications were so slow, in time. Negotiations over terms of trade were therefore very protracted and were sometimes completely impractical. It was impossible for a cotton mill in the North of England to check the quality of the goods exported by a Southern American

Merger Arbitrage Strategies

Stock of the acquisition target is purchased, and if the deal involves some form of non-cash payment, the stock of the acquirer is sold short. Targets tend to trade at a discount to the announced merger transaction price while the negotiations are ongoing, and risk that the deal will not be finalized still exists. By purchasing the target's stock and holding the position until the deal is completed, the merger arbitrage manager earns the spread between the purchase price and announced merger price. Generally, managers prefer to trade only on announced deals. The amount of leverage, deal risk, and diversification as well as the sector or geographic specialization used to construct merger arbitrage strategies varies by manager.

When Should a Mortgage Be Discounted in Exchange

Castile attempted to get the owner of a property he wanted to buy to take paper he held. This was a step to exchange the paper at its face amount. Later in the negotiations Castile tries to make the paper more attractive by discounting the face amount, but the apartment owner's need for cash overshadowed the yield any reasonable discount could generate. While Castile failed in the exchange of the paper, he was at least on the right track in trying to better the buying power of the paper by using it as a part of a transaction rather than discounting it.

Investment Bankers After 1873

The Seligmans were (and remained) closely associated with Ulysses S. Grant, which eased their rise as investment bankers. They were appointed in 1869 the government's agents for the transmission of funds to foreign countries their debut as an issuing house occurred in 1872, and the New York firm rapidly developed into an issuing house for corporate securities.21 After some frantic negotiations, in 1874 the firm collaborated with the Rothschilds on a government issue, and the

Acquire undervalued firms

In either friendly or hostile acquisitions, the difference between the acquisition price and the market price prior to the acquisition is called the acquisition premium. The acquisition price, in the context of mergers, is the price that will be paid by the acquiring firm for each of the target firm's shares. This price is usually based upon negotiations between the acquiring firm and the target firm's managers. In a tender offer, it is the price at which the acquiring firm receives enough shares to gain control of the target firm. This price may be higher than the initial price offered by the acquirer, if there are other firms bidding for the same target firm or if an insufficient number of stockholders tender at that initial price. For instance, in 1991, AT& T initially offered to buy NCR for 80 per share, a premium of 25 over the stock price at the time of the offer. AT& T ultimately paid 110 per share to complete the acquisition. There is one final comparison that can be...

How Sellers Can Use Discounted Mortgages to Help Them Sell Their Property

Had Robinson offered the property at 900,000, it is unlikely that it would have sold. Instead, the broker used creative financing to convert a difficult property into a more easily marketable one. The buyer needed only 100,000 down, and had a low-interest first mortgage and an interest-only second mortgage, both highly acceptable forms of financing for a buyer. Also, since the seller was offering the property with 90 percent financing, little room was left for negotiations by the buyer to reduce the price.

Sellers Statements Sound Too Good To Be True

The two strategies, sweeteners and options, can help bring negotiations to a close when there is not a meeting of the minds on the true status of the situation. Keep in mind, however, there will be times when all the strategies in the world cannot put that broken deal back together.

Knowing When to Purchase

Acquiring bankruptcy properties requires a great deal of patience. When people normally buy a house, they present an offer, the seller responds in a day or two, negotiations proceed for a few days, and then the buyer and seller meet at closing and seal the deal. When you make an offer on a property in bankruptcy, the seller may still be able to negotiate with you, but the sale must be approved by the trustee or the courts. In addition, the trustee must notify all creditors of your offer, and they must sign off on it. In many cases, the creditors object to the sale.

Prepackaging ft Chapter

The company's first proposal to the senior subs (holders of senior subordinated debentures) in late February 1997 had them getting 85 percent of the new common stock and the existing common stockholders getting 5 percent, along with warrants. The remaining 10 percent of the new common stock was to be divided between the junior subs and the preferred stockholders. The senior subs strongly rejected this proposal, and negotiations continued. On March 17, the company announced the principal terms of a plan of reorganization, and a few days later the ad hoc committee of senior sub debt holders formally agreed to vote in favor of it. On March 24 Flagstar filed the plan with the Securities and Exchange Commission (SEC) for its review and approval. Finally, on June 5, it issued a formal prospectus and solicitation of votes on the plan to its creditors and shareholders. In the prospectus the company set a voting deadline of July 7, and indicated that it would file for Chapter 11a few weeks...

How to Negotiate Low Cost Options and Below Market Purchase Prices with Property Owners

In my more than 24 years as a real estate investor, I have seen real estate investors ranging from neophytes just starting out to self-proclaimed seasoned veterans get snookered into overpaying for property, all because they were unable, for whatever reason, to master the fundamentals of negotiations. This hapless group of investors failed to grasp the very basic concept that when it comes to the terms of a real estate transaction, everything, and I do mean everything, is negotiable. They did not understand that, unlike your local Home Depot where every item in the store's inventory has a universal product code or UPC that lists the product's non-negotiable sale price, how much you pay for a real estate option or property really depends on how good a negotiator you are. And if you are a shrewd negotiator, you can buy low-cost real estate options and properties at below-market purchase prices. But, if you are a poor negotiator, you will probably end up paying way too much for your...

Most Americans Dont Like to Negotiate

I had the opportunity to hone my negotiating skills while haggling with store-owners in Seoul, South Korea, and with flea market vendors throughout Western Europe. And unlike the vast majority of my fellow Americans, I very quickly learned how to master the negotiating game in both places. I was able to do this because I always took the attitude of When in Rome, do as the Romans, and observed how the locals conducted business. I ended up running a thriving antique wall and mantle clock business. I bought old clocks the real estate equivalent of fixer-uppers at flea markets in Germany, Holland, Belgium, France, Italy, and Luxembourg and had them cleaned up and repaired. I then resold them to my fellow Americans for a substantial profit because they were afraid to venture out onto the local economy. As a result of my observations, both here and abroad, I have come to the conclusion that most people in the good old U.S.A. would rather have a root canal performed on them than try to...

The Accidental Investment banker

I ecal matter in the coffee pots in the first-class galley. A friend over in corporate communications called with this update on the latest innovative negotiating tactic being employed by the unions. Seven years after leaving my little summer job behind, I was working in Chicago as director of International Affairs for United Airlines, having recently left a position as a Washington lobbyist at a firm run by Stuart Eizenstat, President Carter's domestic policy chief. My official role was to direct a staff responsible for securing and protecting United's international route and facility rights. My unofficial role was as aide-de-camp for CEO Stephen Wolf and his longtime consigliere, General Counsel Lawrence Nagin. Although I loved the job, unfortunately, after barely a year we began to negotiate with the unions over the possible sale of the airline in return for a variety of wage and work concessions to make the airline more competitive. By the spring of 1994, these negotiations were...

Before You Go for the Money Review These Six Key Factors

Remember, until the deal closes, there is still room to negotiate. This means that even though you have the deal tied up, you still have room to negotiate. As long as you have a reasonable due diligence period to make inspections and review different aspects of the transaction, you can still get out of the deal. If you cannot, then you have not tied up the deal correctly. This out clause can be a simple right to approve the final inspection to your satisfaction. Sellers may not like your coming back to the bargaining table at the last minute, but if you discover something that makes you believe you need to renegotiate some of the terms, including the price, then do so. Later is often better than sooner, from your point of view. Sellers start to mentally spend the money and make other plans. In addition, while you are doing your due diligence, you may be negotiating several other aspects of the deal. This could be a refinance of a mortgage, the purchase of secondary financing at a...

Many Property Owners Are Fervent Believers in the Greater Fool Theory

As you will soon find out, many property owners are fervent believers in what is rightfully called the greater fool theory. The greater fool theory is based on the inane assumption that so-called investors who make bad buying decisions will eventually be able to pass their blunders on to bigger or greater fools who will unknowingly buy them out at an equal or greater price than what they paid. And believe me, owners with this mindset have an extremely hard time accepting reality-based logic. The greater fool theory is exactly why, initially, many property owners have unrealistic expectations when it comes to what their property is really worth in its current condition. They fail to grasp why people like me are not willing to bail them out of their financial fiasco and simply pay them what they overpaid for their property. So, during the early stages of negotiations, the favorite expression of most reality-challenged property owners is Surely you do not expect me to sell you my...

Example 11 Using the Option to Renegotiate the Deal

Opening the door to negotiations is what the option is all about. By gaining control over a property you generally shut down the seller's efforts to try to sell or lease the property to someone else. As long as you play your cards right, that is, pick the right time to negotiate for an improvement in the deal, you might be successful.

When to Go Back to the Negotiation Table The timing on

Opening up negotiations again depends on the transaction and the time you have to work with. The most important factor is not to wait until time works against you. The key to this is to make sure you really want to buy the property. Once that decision has been made, then you can begin to make overtures to the seller that all is not as you would like it to be. Care must be taken that you do not relinquish control in the deal. The following is an example that occurred the same week that I was writing this chapter. Take a look at how one prospective buyer stuffed his foot in his mouth by accidentally giving up control.

Six Basic Rules to Follow When Negotiating with Property Owners

Rule 1 As the old saying goes, first impressions are lasting impressions, and this is especially true when you begin negotiating with property owners. The image that you want to project is that of a savvy, polished professional investor. Please understand that when I use the term polished professional, I am not referring to the slick-looking bozos and bimbos who make their living by starring in infomercials on television. Polished professionals are individuals who are sincere, personable, confident, knowledgeable, well spoken, well mannered, well groomed, and in control of their emotions and not like the typical real estate investor who often comes across as a confused, uninformed, clueless flake, looking like he or she just came from a Grateful Dead concert. The point I am making here is that if you want to be taken seriously by property owners, you must act like a responsible adult who is ready, willing, and able to negotiate. Rule 2 As a negotiator, do not try to be what you are...

Recognizing a short sale opportunity

If the senior lien holder has no reason to bargain, you may be able to strengthen your negotiating position by working out short-sale agreements with junior lien holders. If a bank holds the senior lien on a very valuable piece of property, for instance, the bank probably won't accept less than the full amount owed on the property. By convincing junior lien holders to accept less than the full amount owed on their loans, you may place yourself in a position in which you can afford to buy out the senior lien holder's position. Following are descriptions of situations that are excellent opportunities for negotiating short sales with junior lien holders

Operational risk reduction

It is recognised that it is as important to control operational risk as it is to control market and credit risk, but operational risk can be more difficult to assess and quantify. SwapClear clearly reduces operational risk by introducing standard contract terms, by simplifying the settlement of swaps and by the removal of ambiguity in confirmations. This serves to reduce both the bilateral negotiations and the operational issues caused by the handling of exceptions.

Correlating Rate Of Return With Time To Liquidity

Once the investor has looked over the deal and feels comfortable with the risk, he or she is in a position to develop an expected or desired range of returns. Next, based on due diligence and deal structure negotiations, the investor can estimate the amount of time to liquidity. In the case of the early-stage company without cash flow, earnings will likely come at some future date.

Buy Real Estate Options at Prices 5 Percent or Less of the Propertys Value

To gain maximum leverage when using real estate options and to avoid having all of your working capital tied up in real estate option fees, I recommend that you never pay more than 5 percent of a property's current market value for a real estate option. For example, on a property with a current market value of 250,000, you should never pay more than 12,500 for a one-year real estate option. In fact, I probably would not offer more than 10,000 for a one-year option on a property worth 250,000. And to reiterate what I told you at the beginning of this chapter, the amount that you wind up paying for a real estate option usually depends more on your skills as a negotiator than on the actual value of the property you are buying the option on. Depending on the condition of the property and the owner's circumstances, I usually start the price for a real estate option at 5,000 and increase it in 500 increments until I buy the option or cease negotiations.

Truisms In The Valuation Process

Entrepreneurs must grasp some truisms regarding their position with investors. Be convinced of the merits of the opportunity before discussing valuation. Also recognize that demand for capital greatly exceeds supply embrace this leverage in favor of investors during valuation negotiations. Furthermore, understand that investors always discount projections, so run your own cash flow forecasts, paying particular attention to unforeseen follow-up financing requirements. And remember, in the past five years, fewer than two percent of venture-backed exit transactions have been through IPOs. First, prospective investors will not necessarily share the entrepreneurs' level of enthusiasm for the project. Investors must be thoroughly convinced of the merits of the opportunity before any discussion of valuation or terms. Entrepreneurs have to understand that sophisticated investors are besieged with projects. Investors could look at business plans seven days a week. A project may soak up 100...

The Real Meaning of Win Win

Real-world negotiators go for almost as much as they can get. I have negotiated hundreds of agreements, and I can assure you that most people value their feelings more than the objective deal points. Naturally, exceptions occur. But more often than not, you win the most deal points when you encourage the other party to feel like he or she is winning the negotiations. Experience Rules I know of no serious real estate investor who enters a negotiation to strike a fair agreement in any objective sense. Rather, they enter negotiations to extract (almost) as much from the other party as possible. These investors differ primarily in the way they try to win these deal points.

Do the Sellers Face Pressure

You might wonder why you should go to all of this trouble. Why work to discover this property and neighborhood information on your own when you could easily ask the sellers (or their real estate agent) But here's the downside to that approach. You might alert the sellers to some piece of information that they could use to strengthen their own negotiating position. You might tip your hand about some hidden value potential you see in the area or the property.

When and How to Talk about Discounting the Mortgage

Life expectancy for Jones is 73 years. That's only six years from now and his note will still have 19 more years of payments. If you're trying to purchase the property, the time to talk to Jones about discounting is after you already own the apartment and have assumed the note. If you attempt to discount the note during negotiations, Jones is quite likely to insist on more cash, because he feels he has more bargaining power Waiting until after you own the property before asking about discounts will generally get you better results.

Get Seller Concessions Early

In their eagerness to entice your interest, many sellers will begin to concede deal points well before you formally open negotiations. During your initial casual discussions, test the waters. Have you thought about carrying back financing I know you're asking 415,000, but what kind of price would you be happy with Which of the appliances are you willing to leave How much of the closing costs had you planned to pay By casually asking these types of questions, you lower the floor on which later negotiations will stand. Once negotiations begin, sellers tend to play their cards closer to the table.

Negotiate for Yourself

Many first-time investors mistakenly rely too heavily on their agents to actually come up with the terms of their offer and carry out their negotiations. These investors will ask their agents, What price do you think I should offer What's the most you think I should pay Will the sellers pay closing costs or carry-back financing The buyers then follow whatever the agent recommends.

Example 1 Finding a Landscape Deal You have been looking for

You find such a house, and you take steps to get control. Remember, get control, then spend the time, effort, and money to analyze the situation and plan the next step. You enter into negotiations and after a couple of offers and counteroffers, you arrive at a point in the process where you feel you have reached the best deal you can. At this stage of the game, the deal looks good. You have won points and the seller is satisfied with the transaction. You actually want the seller to be satisfied. When a seller begins to believe he or she has sold and made a good deal doing it, he or she begins psychologically to spend the money.

Example 2 Finding the Right Buyer You have just bought five acres

You get control of the property by negotiating until you have a binding agreement. You do not play too hard nose at this stage, and get through the negotiations rather quickly. I like to follow the pattern that if I think it is worth my time as an investor, there might be someone else who will come to the same conclusion. I need to beat those investors to the punch. So do you.

Leave Something on the Table

Negotiating expert Bob Woolf says,There isn't any contract I have negotiated where I didn't feel I could have gone for more money or an additional benefit. Why leave money on the table Because skilled negotiators know,The deal's not over til it's over. If you push too hard, you create resentment and hostility in the other party. Even if they've signed a contract, they'll start thinking of all the ways they can get out of it. Even worse, if you stumble on the way to closing, they won't help you up. They'll just kick dirt in your face. Especially in the purchase of real estate where emotions run strong you're better off leaving something on the table. The purchase agreement only forms stage one of your negotiations. Later, you might encounter problems with respect to property inspections, appraisal, financing, possession date, closing date, surveys, zoning, building permits, or any number of other things. Without goodwill, trust, and cooperation, unpleasant setbacks on the way to...

What to Do If the Optionor Refuses to Sign All of the Documents at the Closing

During negotiations and prior to the closing, you must explain to the optionor that he or she will have to sign the title transfer documents for the property real estate purchase agreement and warranty or grant deed at the same time the option agreement is signed. I have found that if you make it clear from the very beginning of negotiations that signing all the property title transfer documents is part of the transaction, this will not become a deal-killer later on. And it has been my experience that if you act in a competent professional manner and do everything exactly as you say you are going to do it, you will gain the trust of most reasonable property owners. The investors who have the most problems with optionors are the ones who come across as slick wheeler-dealer types and have a hard time giving people a straight answer. However, when an optionor does change his or her mind and refuses to sign the real estate option agreement, addendum real estate purchase agreement, and a...

The Making of Americas Largest Bank

In mid-August 1995, Walter Shipley, chairman and chief executive officer (CEO) of Chemical Banking Corporation, was preparing to leave the bank's Manhattan headquarters building after a long day. For the past four weeks he and other senior Chemical managers had been in intensive negotiations with their counterparts at Chase Manhattan Corporation, including that bank's chairman and CEO Thomas Labrecque. At issue was whether the two banks would agree to merge in a friendly transaction. If completed, the merger would produce the largest commercial bank in the United States, and the fourth largest bank in the world, with total assets of nearly 300 billion and over 74,000 employees.

An Illustration Of Bargaining

Buyer for the property in our example, and using the required rent raise (rrr) idea introduced in Chapter 3, we will look at how this process enters into the negotiations with the seller. that fits in our context. In general, discount rates are the aggregate of all the negotiations that take place every day with all the buyers and sellers in a market. They encapsulate the combined expectations of a large number of people who compete with one another to acquire business opportunities that have uncertain outcomes. During times of positive business conditions characterized by solid growth, low inflation, high employment, and low interest rates, discount rates will be lower than they are during the opposite times of negative macroeconomic news when buyers demand more compensation in the form of higher discount rates for undertaking risk when the horizon is comparatively dark.

Chase Manhattan Corporation

Chase management agreed that the bank was undervalued, but believed the problem was not in being too diversified indeed, it felt that the company's large reach was the very essence of its value.3 In June 1995, the bank responded by announcing a restructuring program that was code-named Focus. Under this program the bank would reduce its workforce by an additional 3,000 to 6,000 people, and, by 1997, reduce its annual noninterest costs by 400 million (pretax). One banking analyst, however, commented that Chase's biggest problem isn't one of expense reduction but revenue growth. In an era of rapid bank consolidation, product innovation and cutthroat competition, Chase hasn't been aggressive enough in pursuing new business opportunities.4 Major initiatives under the program had not yet started when final merger negotiations with Chemical commenced in mid-July 1995.

Closing and Possession Dates

Your offer to buy a property should set dates for settlement and possession. When you or the sellers place great importance on either a quick (or delayed) closing date, that date can play a valuable role in your negotiations. Because of a need for ready cash, the sellers might trade a lower price for an early closing date. Or for tax reasons, the sellers may prefer to delay settlement until after they've begun a new tax year.

Selecting A Property To

In reality, you do not select the property you are going to buy, but instead you select property you would like to own. The time between wanting to own it and actually owning it has yet to come. It is highly possible that once you begin negotiating to buy, you will change your mind about the property in the first place. Price and terms the seller is willing to take can be the deciding factors. Or, as you continue to progress in the selection process you might start negotiating on one parcel of land or one building only to find another which suits your goals better than the first. In that event, simply break off negotiations and go on to the second property. When you enter the market to buy, the condition of that market will affect the method in which you negotiate. If it is a seller's market for the kind of property you want to buy, you cannot be too standoffish in your attempts to bring the price down or to get better terms in the negotiations. If you do, you are apt to lose the deal...

Avoid Personal Confrontation

Seller Well, you can take that 95,000 offer and stick it. As you can see, negotiations have broken down. Or try this Good salespeople who know the art of negotiation can deal with a difficult seller (or when we turn things around with a difficult buyer) without compromising your interest in the deal. The salesperson can absorb (as he or she should) the heat of the negotiations so the other side of the deal can vent his or her frustrations at the broker and not at you.

Learn Something about the Other Party

The owner of the lot never ended with a home this client had, but an exchange was made in which the builder from North Carolina did participate, and he did get the lot he wanted. The seller of the lot got what he wanted because of the North Carolina builder. Learning the true reasons for a sale or the real use to which the money is going to be put can be next to impossible sometimes. Your broker or salesperson will have to dig a little to find out what he or she can, and sometimes you are well into the negotiations before you find even anything that resembles the truth. Yet it should be clear to you that the more you know about the other party to the deal the better you can come out on top of the negotiation. - n fact, knowing more about the buyer is more important for the seller than the other way around. Best of all, the seller can find out information about the buyer once the negotiations start. Sellers being asked to hold secondary financing, for...

There Are Other Fish in the

Remember, that there are other fish in the sea. I 've seen buyers go into deep depression because they lost out on a property they wanted to buy. Losing deals will happen to you if you plan to buy and sell real estate. There will be other investors who have snookered you out of a great deal, and other times it will be turned around. Yet, crying over spilled milk won't get you anything. Move on to the next deal. Be careful, however you might act a little quicker the next time out of fear of losing the next deal, so watch out for this overreaction. However, you need to reflect back on why you lost the deal. Were you too hardnosed in your negotiations Did you or the seller become offended at something done or said or what was believed to be happening Perhaps the broker said or did something that upset the apple cart. Find out and make changes, if you can, to avoid that situation in the future.

Time Is the Key Factor to Profit

Your viewpoint on winning should be tied to what it is you want to accomplish. Your flexibility in the negotiations will be very important to keep alive all possibilities to achieve what you wanted in the first instance. Try to keep personalities out of the picture by avoiding direct confrontation with the other party. If you have a broker or salesperson, let him or her become the buffer in nailing down the best deal for you.

Additional Points to Consider

Who on the team has run a business There is a big difference between running a business and dreaming of a new product or a new business. Has the person handled payroll, employees, tax issues, legal issues, contracts, negotiations, product development, cash flow management, raising capital, etc.

Getting The Approvals Needed With The Time Needed To Implement Them

Once the buyer and the seller are entering into negotiations, it is critical for the seller to know what the planned development will be. Too often this is not fully explained, or is explained in a way that is in itself misleading. If the seller understands the project, then spell it out in the contract. This will at least keep an aggressive developer from trying to push through a development that allows far more development than the property will truly support. Such excessive development may be the developer's attempt to rezone or replatt the property which then fails and results in a reduction of real value to this site.

Background Of The Leveraged Buyout

On October 24 KKR announced its leveraged buyout plan to acquire RJR shares at a price of 90. KKR expressed its desire to keep negotiations friendly and called for senior members of management, including Johnson, to join KKR's acquisition efforts. KKR began its tender offer for up to 87 percent of the outstanding shares at 90 per share. KKR also announced its intention to exchange unten-dered shares for new securities in a second step. Confidentiality agreements between KKR and the Special Committee were executed allowing KKR access to confidential information about the company. The Committee set the ground rules whereby interested parties were to submit the potential purchaser's highest offer by 5 00 P.M., November 18, 1988.

The Move By United Management

Not long after United announced its intention to undertake certain kinds of unilateral restructuring, however, the unions reacted. Based upon Steve Wolf's past history in the airline industry, commented a leader of the pilots union, when he says he's going to do something, he does it. In April 1993, a coalition of the three principal unions sent a letter to the UAL board indicating their interest in working out a shared solution to the company's problems, and from June to December the unions and UAL management carried on intense, sometimes acrimonious negotiations, involving proposals and counterproposals from each side. In late September, the flight attendants dropped out of the negotiations because of the company's decision to open a flight attendant domicile in Taiwan, thus effec

Living the life of a commercial sales agent

Getting leads and listings are at the roots of success in this business. Of course, the two are related. You can have the greatest sales skills this side of the Mississippi. You can also have the keenest knowledge of real estate negotiations (see Chapter 5) and be a master of your market. But if you have no one to talk to (leads, that is), all that skill and knowledge is for naught. The key to generating leads is to go out and capture an audience of interested potential clients who own property and know of others who own. You can't get listings if you don't generate leads.

Union Issues And Political Realities

At one point in the fall of 1993, negotiations between United management and employees appeared to come to an end. In early November, United management, finding the latest proposal from employee groups inadequate, announced its intention to follow through on one of its unilateral restructuring options, to sell its flight kitchens. This would put roughly 5,200 union employees out of work but realize considerable annual savings for the company. (See the line Flight kitchen sale savings in Exhibit 14.9.) The unions were enraged. A telephone message recorded by the machinists' union for their members referred to United management's reckless, ruthless, greedy, union-busting course. They threatened strikes as well as public demonstrations against the company's directors. In the background of the negotiations at United, moreover, was a dispute that was erupting at American Airlines, the second largest airline in the country. On November 18, shortly before the busy Thanksgiving holiday...

The St Valentines Day Massacre

Negotiations if the yen rose, Japanese exports would become more expensive and more difficult to sell around the world. Soros believed that President Clinton and Japan's prime minister Morihiro Hosokawa would settle their trade dispute that settlement would then cause the U.S. government to let the yen fall.

Of trade the dimensions of indi tendency to overshoot

Soros assailed the Clinton administration for the hard line it was taking with the Japanese on trade and for trying to talk the dollar down. That's quite harmful for the stability of the dollar and the stability of the markets. Dollar bashing as a method of dealing with trade policy with the Japanese is a dangerous instrument that we ought not to use. Cynics read a not-so-subtle market message from the Master Go long the yen and short the dollar until trade negotiations stabilize.

The Prisoners Dilemma and the Market

The charm of the dilemma has nothing to do with any interest one might have in prisoners' rights. (In fact, it has about as much relevance to criminal justice as the four-color-map theorem has to geography.) Rather, it provides the logical skeleton for many situations we face in everyday life. Whether we're negotiators in business, spouses in a marriage, or nations in a dispute, our choices can often be phrased in terms of the prisoner's dilemma. If both (all) parties pursue their own interests exclusively and do not cooperate, the outcome is worse for both (all) of them yet in any given situation, any given party is better off not cooperating. Adam Smith's invisible hand ensuring that individual pursuits bring about group well-being is, at least in these situations (and some others), quite arthritic.

Broad Economic Overview

The Canadian economy started to advance with the depreciation of its currency against the U.S. dollar and the Free Trade Agreement that came into effect on January 1, 1989. This agreement eliminated almost all trade tariffs between the United States and Canada. As a result, Canada now exports over 78 percent of their goods to the United States. Further negotiations to incorporate Mexico created the North American Free Trade Agreement (NAFTA), which took effect on January 1, 1994. This more advanced treaty eliminated most tariffs on trading between all three countries. Canada's close trade relationship with the United States makes it particularly sensitive to the health of the U.S. economy. If the U.S. economy sputters, demand for Canadian exports would suffer. The same is true for the opposite scenario if U.S. economic growth is robust, Canadian exports will benefit. The following is a breakdown of Canada's trading partners

Reducing Default Risk

AAA-rated companies are in a strong negotiating position in derivatives markets. This has led some financial institutions, which do not themselves have AAA ratings, to set up subsidiaries with AAA ratings for the puiposes of trading derivative securities. The parent company guarantees the subsidiary, but the subsidiary does not guarantee the parent company.

Bad News for the Handicappers

A large number of such studies demonstrate that people are consistently overconfident when forming strong impressions from limited knowledge. Lawyers, for example, tend to overestimate their chances of winning in court. If both sides in a court case are asked who will win, each will say its chances of winning are greater than 50 .43 Studies of clinical psychologists,44 physicians,45 engineers,46 negotiators,47 and security analysts48 showed they were far too confident in the accuracy of their predictions. Clinical psychologists, for example, believed their diagnosis was accurate 90 of the time, when it was correct in only 50 of cases. As one observer said of expert prediction, it is often wrong but rarely in doubt.

Mary Mcdonald Millionaire Real Estate Investor

The second fastest option to earn cash is Control & Assign. This means you gain an option or an assignable contract on an investment property and then find someone else to acquire it. Since you control the property, you have negotiation power. This method has a little better margin than Find & Refer, but the volume potential is a little less.

The Nine Essential Contract Clauses of Any Owner Carry Financing Deal You Do

Obviously, as an investor the more time you have before that balloon note comes due the more flexibility you have. But there are times when the seller won't give you as much time as you would like. The best way to handle these types of sellers is indirectly. Don't argue with them and butt heads instead, agree to go along with them. Then later in the negotiations simply ask for either a one-time or two-time renewal of the term of the loan, or for an extension if you need it.