This stage is the point in the process to which you reach an agreement. It is important to find out if the other side has the capacity to follow through with the things they promised.
To put this in context with your retail lease, quite often parties may assume that an agreement has been reached when in fact a negotiating party has still to deliver on a further approval process. For example, you may be under the assumption that terms have been agreed to when in fact there still remains final Lessor/Landlord approval processes, which essentially means that any agreement is still subject to further revision of the outcome in front of you.
This is where the devil truly lies- in the detail. Many times we have seen a Retailer come away from a negotiation under the firm belief that the deal is done, only to have a final Landlord approval process introduce a variation to the terms. Beware of paragraphs stating words to the effect “subject to final board approval,” If so then you should be setting to adjourn the negotiations while the other party confirms them with you.
This is the time to put down in writing the common interests and produce a comprehensive summary of the agreement. Sometimes you should consider strategies here to lock-in a commitment. Be sure to agree on next steps as well, and never forget to thank the other party for their willingness to negotiate – even when no agreement is reached.
It is essential now to confirm a timeline as to when you expect to receive such agreement from the other side and ensure that you have documented everything. That way you can cross check your notes, negotiation strategy plan and overlay the expected outcomes from all parties from your side of the table as there is usually little room to move if a critical piece of detail on the commercial terms are missed.
Remember to ensure you fully understand the complete terms, for example: common mistakes are made around not understanding terms such as ‘turnover rent” and “category 1 works”. If in doubt take the time to be clear across the entire agreement and if there have been several communications on differing aspects of the layer cake to reach agreement, summarise these and cross check. (we will discuss the common traps in future posts)
Don’t fall into the trap of experiencing the euphoria of the negotiation process coming to an end and allow vital details to chance as the next and final stage is the execution.