Negotiating for value when the other party has more power
This is a deal we’re proud of because we helped a client achieve a return 26 times greater than the initial offer, £1.3m rather than £50k.
Our client is the youngest of three sisters who inherited a farming estate, each was bequeathed a one-third interest. The middle sister was granted a farming tenancy, lived in the house and farmed the land. It can be difficult to bring farming tenancies to an end, so this put the middle sister in a strong position.
After a period the middle sister offered the older sister £100,000 for the older sister’s interest in the property, which offer was accepted by the older sister. This left the middle sister in the position of operating the farming tenancy and holding a majority interest in the property.
Some time thereafter the middle sister offered to buy the youngest sister’s interest but this offer would have given the youngest sister just £50,000. At that point the youngest sister approached Colobus and engaged us to help negotiate a better deal.
Given that they were sisters, I assumed that reason and family ties would prevail and that an equitable solution could be agreed. That proved impossible. Middle sister proved, in my view, both stubborn and greedy. She could also force our client to bear substantial costs (e.g. repairs to farm buildings). This left our client and Colobus with a conundrum.
We solved that by finding an investor who is interested in farmland and property and who, after some challenging negotiations, was willing to pay our client £1.3m for our client’s one third interest in the property. That’s a 26-fold improvement on the original offer but, to us, the best return was the relief that it brought to our client.