By Christopher Rizza, Partner
Most clients are familiar with the old adage “time kills all deals”. Given current market conditions and the fact that a number of pundits believe that we are potentially entering into an economic slowdown, it is increasingly critical to complete real estate transactions – and commercial leases and purchase/sale agreements in particular – in a timely and efficient manner.
Dealmakers (whether representing landlords, tenants, buyers, or sellers) would be wise to consider these key points to keep deals from potentially stalling out and dying:
- Limit the amount of time spent negotiating nonessential provisions. As tempting as it may be to revert back to your form language for most provisions, if the proposed revision from an opposing dealmaker involves a non-material provision, sometimes it is best to set aside your “pride of authorship” and move on to address more material issues.
- Decrease the number of drafts that are exchanged during the negotiation. Jumping on a conference call can often help both parties get on the same page quickly and be a more efficient way of working through issues than exchanging redline after redline (and spinning your wheels over email).
- End conference calls and meetings with clear commitments as to next steps. Be clear on what has been agreed to on the call and who is responsible for taking the lead on redrafting and the timing of sending a revised draft.
- Promptly respond to opposing dealmakers’ drafts and redrafts. Don’t let drafts and redrafts sit in your inbox, especially if the transaction is close to the finish line. Deals can go stale and die at the finish line just as easily as in the middle of negotiations.
- Keep your clients apprised of roadblocks and impasses. Your job is to protect your client’s interests, but your client may be willing to live with the risk of a particular provision in order to move forward and finalize the agreement.
In a shifting economic environment where budgets, priorities and circumstances may change quickly, time may lead dealmakers to consider other opportunities or reevaluate their needs. One of our (many) duties as a dealmaker is to be diligent and shepherd deals to timely completion. So be a dealmaker – not a dealbreaker.
Chris Rizza is a partner at Harvest LLP. With dual JD/MBA degrees and over a decade of “big law” experience, Chris combines business acumen with a comprehensive legal skill set to balance business and legal considerations for his clients on every deal. His practice focuses on commercial leasing and related real estate transactions spanning across all of the major asset classes, from retail and industrial to office and mixed-use. On the landlord/developer side, he represents REITs, institutional investors, pension funds and development companies. On the tenant side, he represents national and regional tenants, as well as individual closely held businesses.