Business negotiations require intensity and focus. Unfortunately, the level of focus required to work through complex issues with our counterparts across the table often leads us to forget about the importance of selling the deal to outsiders.
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right of first refusal
What is the Right of First Refusal?
As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal, has become a common and useful tool to add to your business negotiation skills.
The right of first refusal is a contractual guarantee that one side can match any offer that the other side later receives. This is perhaps most well-known in real estate negotiations.
For example, a tenant negotiating an apartment lease with a prospective landlord could imagine bidding on the apartment down the road if the landlord ever decides to put it up for sale. Before signing the lease, they might ask the landlord for a right of first refusal—the right to match any legitimate third-party offer she receives for the apartment if she puts it up for sale. In this scenario, negotiating real estate right of first refusal could be a win-win for the tenant and the landlord.
But these matching rights, as they are sometimes called, may happen in other settings, as well. For many decades, Broadway plays have been developed and refined in workshops. Performers, producers, stage managers, and the creative team meet to rehearse for about a month, reports Michael Paulson in the New York Times. If all goes well, the producers stage the show for potential investors.
Under the Actors’ Equity union’s standard agreement, workshop participants received a salary of about $600 per week plus benefits, a right of first refusal to play their role on Broadway, and a share of 1% of any future royalty pool for 18 years.
That’s just one example of how negotiation techniques can transfer across situations.
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10 Popular Business Negotiation Articles
Here are ten popular business negotiation articles on the Program on Negotiation website. Drawn from a variety of negotiation case studies as well as negotiation research, the following articles offer strategies for engaging in integrative negotiations aimed at creating win-win scenarios for each party at the negotiation table.
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Right of First Refusal: A Potentially Win-Win Negotiation Tool
Looking for ways to get more value out of your sales negotiations? You may be able to do so by negotiating a right of first refusal. A right of first refusal, also known as a matching right or right of first offer, is a contractual guarantee that one party to a business deal can match … Read More
Compensation Negotiation Tips: Lessons from Broadway
Compensation negotiation tips often revolve around encouraging job candidates to ask for a higher salary and teaching them how to frame their salary requests. But negotiators who take a broader approach to evaluating a job offer may be able to set themselves up for much greater long-term earnings. A negotiation initiated by the original cast … Read More
Right of First Refusal: A Tool to Negotiate with Care
Among many useful negotiation skills and strategies, a right of first refusal can often benefit negotiators. In a right of first refusal, the right holder is typically given the power to buy an asset on the same terms that the grantor would receive from any other legitimate, prospective bidder, according to Harvard Business School and … Read More
Right of First Refusal for Real Estate
If you are interested in buying the property you’re renting, but aren’t able to do so immediately, you may benefit by negotiating a right of first refusal from the property owner. A right of first refusal for real estate can create value for buyers and sellers alike. But what is “right of first refusal” in … Read Right of First Refusal for Real Estate
What is the Right of First Refusal?
When transferring property, sellers sometimes insist on real estate rights of first refusal – the chance to be first in line to repurchase the property if their buyer later decides to sell.
… Read What is the Right of First Refusal?
Top Business Negotiations: Michael Bloomberg versus the New York Teachers’ Union
Business negotiators seeking to resolve a dispute should foster a cooperative spirit, framing negotiations around gains rather than losses. And when negotiators are far apart, it may take a professional mediator or other independent party to help bridge the divide.
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A Second Look at Rights of First Refusal
When transferring property, sellers sometimes insist on rights of first refusal—the chance to be first in line to repurchase the property if their buyer later decides to sell. A right of first refusal can be an obvious advantage if your financial circumstances later change.
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In Business Negotiations, Capitalize on a Right of First Refusal
As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal—a contractual guarantee that one side can match any offer that the other side later receives—has become a common and useful tool to add to your business negotiation skills.
Claim your FREE copy: Negotiation Skills
Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
Concealed information in Business Negotiations
The Clearinghouse at PON offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. The following role simulation explores client/attorney relationships and the complexity of information exchange.
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