Backmasking Forensics – Uncovering Hidden Messages in Agreements

Led ZeppelinAccording to Wikipedia, Backmasking is, “a recording technique in which a sound or message is recorded backwards onto a track that is meant to be played forward.”

In some instances, seemingly random sounds take on questionable meaning when played backwards. In Led Zeppelin’s Stairway to Heaven, Robert Plant seems to say, “Oh here’s to sweet Satan. He’ll give those with him 666.” When the Beatles’ Revoultion 9 is played in reverse, there is a brief passage that sounds something like, “Turn me on dead man,” which heightened the “Paul is dead” rumors of the early 1970s. However, backmasking is often a deliberate process, in which artists send messages to their diehard fans who relish discovering and decoding the hidden communications.

It is usually arduous to discover and decipher audio backmasked messages. However, the process of decoding the hidden messages in your partner agreements is much simpler. You can perform such agreement forensics by looking for the clues outlined below. One such clue proved to be worth $20 million to one of my adVentures.

It’s Not What Was Said – It’s What Wasn’t

In The Bro Factor, we learned how to cultivate meaningful relationships with compatriots outside of our adVenture. Such relationships often significantly impact the effectiveness of your negotiations. However, despite your efforts to ingratiate yourself with your Bro, you must always keep in mind that he is also your negotiating Foe. In essence, the person on the other side of the table is your Bro Foe.

Often, the most important aspects of an agreement are not the actual words on paper, but rather the terms and conditions that your Bro Foe has deleted or otherwise modified from an earlier iteration of the agreement. If you can divine the original intent of a contract or otherwise identify what aspects have been modified or removed, you will be in a stronger negotiating position. If you have insights into specific contract terms that your Bro Foe has agreed to in the past, you can comfortably parley these known negotiation positions to your advantage.

A $20,000,000 Mistake

Backmasking mistakes can be expensive. Case in point: while reviewing a document which had been prepared by a Bro Foe, I was struck by a strange formatting issue. I tried to delete some text by backspacing and the cursor would not move backwards. This is generally a sign that the Track Changes feature of Microsoft Word is turned on. However, there were no changes displayed.

When I turned on the Original Showing Markup feature and I was shocked to see a number of changes that my Bro Foe had made before forwarding the document. The most interesting of these marked changes was a modification of the proposed purchase price. The price that was marked out was $20 million more than the “final,” unmarked price that was shown when the marked changes were not displayed. This alerted me to the real negotiating boundary that my Bro Foe was willing to accept.

It was apparent that my Bro Foe’s team had marked the changes to facilitate their internal discussions and at one point they considered offering a significantly higher purchase price. However, it was evident that they did not intend for me to see these internal changes. This was a major mistake that cost them a little over $20 million, as I was able to negotiate them to the top of the price range that I knew they had internally contemplated. This knowledge helped me remain resolute and eventually we achieved the price that we were seeking.

Note: Astute students on The Fringe will wonder why the first iteration of the agreement was drafted by the Big Dumb Company (“BDC”). Per Kiss of Death, entrepreneurs should do everything possible to draft the initial iteration of an agreement. Unfortunately, in the case of this very large deal, I was not able to secure first-drafting rights. However, the hidden message I discovered more than made up for the strategic gain I might have accrued by creating the agreement from scratch.

It’s Not What Was Said – It’s Who Said It

When Marked Changes are displayed, Microsoft Word also identifies the author of the changes, along with the date and time the changes were made. Such annotations are displayed when the cursor is rolled over a particular marked change. Each contributor’s edits are assigned a different color, which facilitates identifying who changed what. Such notations make perfect sense when editing an internal document, as it is clearly helpful to know which changes the CEO made versus those suggested by the Summer Intern. However, in the hands of your Bro Foe, such information represents a significant backmasking decoding opportunity.

BDCs often negotiate agreements by committee, involving a number of individuals from various departments. Knowing who suggests a particular edit gives you an appreciation for the likelihood that your Bro Foe will or will not agree to modify it. For instance, if a business term is modified by a lawyer, there is a chance you can persuade your Bro Foe to agree to a revision that is more equitable to you, as the change was not driven by a member of his operational team. In addition, comments proposed by an outside legal counsel are more likely to be overridden than those made by an in-house lawyer, as your Bro Foe may have a personal relationship with the in-house lawyer that he must respect.

If a change is directly attributable to your Bro Foe, the issue is likely of personal importance and he may be less likely to accept a revision of his proposed language. In contrast, if changes are made by one of your Bro Foe’s peers or subordinates, you can assume that you will have a better chance of negotiating less onerous terms, as you know your Bro Foe probably does not have a personal, vested interest in such changes.

If your Bro Foe’s boss (or anyone at the BDC who is in a more senior position than your Bro Foe) modifies the agreement, you can be assured that the likelihood of negotiating a change in such text is low and will probably cost you significantly in terms of what you will have to give up to get a change pushed through.

Document Properties

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Another potential treasure trove of backmasked messages resides in the File Properties directory within Microsoft Word. This information will often provide you with important clues regarding a document’s genesis.
For instance, if you can see from the Title that the document was originally crafted to support a publicly announced licensing deal, you can research the deal and determine what terms were changed in the version of the agreement submitted to you. If the BDC agreed to certain terms once before, then you should strive to incorporate equal or better terms into your agreement.

You may also be able to determine the origin of the document by reviewing the Author and Company fields. If the agreement was originally drafted by an entity other than the BDC with whom you are negotiating, perform research regarding similar publicly announced deals and attempt to conform your agreement to the publicly disclosed terms.

7You should also peruse the Statistics tab under Properties to determine when the document was created and the total time that has been spent editing the document. If the inception date is recent, then the agreement may be a one-off document without a legacy that you can interpret. However, if the date is in the distant past, you can be assured that the document represents the other party’s standard terms and conditions. Such long-standing, standard documents often contain codified language that may be difficult for your Bro Foe to modify. An agreement created specifically for your deal will have less history and thus your Bro Foe should have greater latitude with respect to modifying the text.

Always review the Properties section of agreements you create, as you can get an idea of the amount of time the other side spent reviewing the document. If they did not spend significant time on the agreement, it may signify that your deal is a relatively low priority. The lower the priority, the less effort the BDC will put into crafting the deal and the better chance you will have of negotiating advantageous terms.

If your Bro Foe’s team expends a meaningful amount of time editing and reviewing your agreement, there may be multiple parties involved in the negotiations. The more parties involved, the higher the priority the BDC is likely allocating to your deal and thus the more resistance you can expect when negotiating key deal points.

Formatting Irregularities

Sloppy formatting is often a roadmap highlighting where text was removed or added from or to a previously negotiated agreement. For instance, extra spaces between paragraphs often indicate that a provision was deleted. Even extra spaces between words can denote that text was removed, as in the sentence: “Vendor shall at all times agree to abide by all requests…” The extra space may lead you to discover that the word “reasonable” was removed before the word “requests.” Then again, it may simply be a typo. As with all backmasking clues, common sense and context rule the day. An extra space in an innocuous section may simply be a typo, whereas the same extra space in a key provision might represent a tell-tale sign that something significant was deleted.

Another indication of where changes have been made is the presence of non-consecutive section numbers (which denote a deleted section) and repeated section numbers (which denote an added section). Section headings are sometimes hard-coded, which leads to numbering irregularities when changes are made to preceding sections. Fortunately for backmasking-savvy negotiators, Microsoft Word does a pathetic job of automatically formatting numbered and lettered section headings, so such irregularities abound. In each instance of non-sequential section numbers, attempt to interpret what might have been added or deleted and assess whether it is worthwhile to attempt to negotiate the term back in or out of the agreement.

Covering Your Backmasked Tracks

In order to stymie your Bro Foe’s efforts to gain insights into your negotiating tactics, simply avoid all of the missteps outlined in this entry. A summary of the actions you can take to eliminate any inadvertent backmasked messages is as follows:

  • Property Protection - When you create a document (you are going to write as many agreements as possible, remember?), always clean up the Properties section. Be sure the Title, Author and Company contain innocuous information.
  • One Voice - Incorporate all changes from your internal constituents onto a single document. Although this process can be tedious, it allows you to filter out co-workers’ changes which you deem inappropriate, unattainable or incongruent with your overall negotiating goals. By consolidating all the changes made by your team, your Bro Foe will be unable to differentiate between the issues which are of particular importance to you and those suggested by a team member.
  • Clean Sweep - When you delete or add text to an existing agreement, remove extra spaces and line breaks and ensure that all section numbers are consecutive. To ensure leaving no clues behind, from the Edit Menu, Select All, Copy and the Past the copied text into a brand new document.

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If you properly cover your backmasking trail, your one-sided ability to decode backmasked messages will give you a tangible advantage over your Bro Foe. Although agreement forensics involves discipline and a bit of pedantic tedium, do not pass up this opportunity to gain valuable insights into the BDC’s negotiating tactics.

Clearly, there are limits to interpreting the meaning associated with hidden messages in agreements. If you do not apply a liberal dose of common sense, you may find yourself as chagrined as the Electric Light Orchestra fans who discovered a backmasked message on the Secret Messages CD which declared, “You’re playing me backwards. The music is reversible, but time is not, turn back! Turn back! Turn back!”

Please share your agreement forensics stories. Tell us how your sharp eye and diligence helped you to gain the upper hand in negotiations with your BDC Bro Foe.

Copyright © 2008 by J. Meredith Publishing. All rights reserved.

 

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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