“No” Is Not an Answer

This morning started with that old familiar song: “No.”

Ah, just a regular Wednesday, my dudes.

I’ve been in this game too long to believe that the first “no” always means no. “No” can mean a surprising number of things. “I don’t have time for this right now.” “This requires too much thinking.” “This doesn’t fit neatly into one of our programs.” “I don’t understand the deal yet.” “I don’t like this particular part of it.” “My company won’t do it.” “I’m not comfortable enough to say yes.”

And, of course, sometimes it really does mean: “This is a bad deal.”

If I had stopped every time somebody told me “no” over the years, I wouldn’t have gotten very far. But that doesn’t mean I respond with brute force. “What do you mean, NO? Look closer! Run it again!” That’s not negotiation. That’s just refusing to listen.

The interesting part starts when I ask: "Why?" And I don’t mean “why?” as an argument. I mean it as a genuine request for information. What exactly doesn’t work? Is it the leverage? The borrower’s liquidity? The property? The location? The exit strategy? The loan program? Or is it simply the wrong lender?

Then there’s an even better question: “What would have to be different for your answer to become yes?” Now we have something to work with. Maybe 85% leverage is a no, but 75% works. Maybe the borrower needs more liquidity. Maybe this lender doesn’t like that property type, but another one specializes in it. Maybe the deal needs to be structured differently. Maybe one missing piece of information changes the entire picture.

And sometimes the person saying “no” has spotted something I should have noticed myself. That possibility is important. Because there’s also a danger in becoming too good at getting past “no.” If I keep taking the same deal from lender to lender until somebody finally says yes, have I actually solved the problem? Or have I simply found the person least concerned about it?

Sometimes a good “no” is worth considerably more than an easy “yes.” I think experience teaches you to distinguish between a wall and a signpost. A wall says: Stop. A signpost says: Not this way. And I usually can’t tell which one I’m looking at until I start asking questions.

That’s why I’ve come to think that “no” is very often the beginning of the art of the deal. Not because every no should be turned into a yes. Sometimes "No" is exactly the answer I needed. But very often, the first “No” is where the real conversation begins.

(When somebody tells you “no” on a deal, what’s your next question?)