Negotiating Pointers to Benefit Your ClientBanker Resource
August 13, 2013 — 1,331 views
Whether it is a dispute regarding your phone bill, buying a house, or even paying off credit card bills, the principles of negotiation remain the same. You need to remember that every experienced and skilled negotiator, despite feeling nervous, knows how to suppress these outward signs during the negotiation. A commercial loan restructuring usually requires an excellent working knowledge of numerous commercial law aspects such as litigation, transactional, and bankruptcy issues.
It is necessary to also understand various approaches and issues related to loan workouts, along with the key provisions to both the lenders and borrowers, based on the market trends. Reviewing strategies related to all the stages of loan default, along with exploring the bankruptcy effect is important to help your client benefit.
Loan restructuring is usually a remedy for your client, who is facing foreclosure and delinquency as a property owner. Every commercial loan negotiation has certain objectives such as discounted loan payoffs, full-debt restructures, partial loan write-downs, and the final discounted settlement.
Planning your Workout Strategy
While negotiating for the benefit of your client, ensure that you have a complete evaluation and analysis of the finances and the expected recovery value, which is also beneficial to a lender in the foreclosure. Compare and analyze all appropriate expenses and establish a market value. Also, thoroughly review the exposure of the borrower to a deficiency judgment. Once all this is done, combine the expected recovery value in the future and discount it from the personal and collateral assets, creating a present value. Every negotiation begins at this step with the discounted value. During the final phase, negotiate with the lender.
Proper Preparation of the Analysis of Finances
In a successful negotiation, preparing a proper financial analysis and placing it uniformly on a spreadsheet covers at least seventy percent of the work. Even though the comprehensive packaging is quite essential for the lender, all negotiations must be directed towards the maximum recovery’s present value. The lender’s asset–management cost can actually reduce the maximum recovery in a commercial loan restructuring process.
Along with closing the economic risk of the lender, the capital structure adjustment of a certain property permits the owner to maintain operation and ownership. It could also allow the owner the possibility for selling the property at a higher price than what the lender might get as per the real-estate value.
When going in for strategy structuring and implementation of these strategies, it is essential to understand debt cancellation, forbearance, loan structuring, short sales, land trusts, deeds, and even bankruptcy. Understanding how these actions and devices can be utilized independently, concurrently, or even sequentially is important in loan structuring and implementation of the strategies.
In order to make proper negotiations, which will eventually benefit your client and your firm, you will need to follow the above mentioned steps and strategies. It is also extremely essential to coordinate with the other professionals regarding the use of relationship strategies. Be aware of the other professionals who are bound to implement other aspects of analyzing and assimilating data or even processing the actions.