Trump's Deal-Making Tactics: Instincts, Secrets, and Win-Win

Book: How to Get Rich
Author: Donald J. Trump (with Meredith McIver)
ISBN: 1-58836-410-0

Previous: Previous: Negotiation Is Persuasion, Not Power
Next: Next: When to Be Stubborn and When to Say No

This post covers three tactics Trump returns to in deal after deal: trust your instincts, hold your cards, and let everyone win. Each one comes with a real story. Two involve 40 Wall Street. One is Trump Tower. One is Atlantic City.

Trust your instincts

When Trump took over 40 Wall Street, his associate Abe Wallach was sure the play was residential conversion. Office leasing looked dead. The city was pushing downtown residential incentives. Every broker agreed. Floor plates were wrong. Lobby and elevators needed huge work with uncertain payoff.

Residential conversion was expensive. A law firm occupied five floors. Buying them out would blow the construction schedule. Trump’s gut said the building could be a prime office address again. There had to be a way.

He asked George Ross for a fresh scenario. Ross split the 1.3 million square feet into three stacked buildings:

• Top 400,000 sq ft: small floors, great views. Boutique tenants paying premium for full-floor prestige.
• Middle 300,000 sq ft: lower rent per foot, still enough to cover purchase and renovation.
• Bottom 400,000 sq ft: hardest to lease. But even if empty, the top 700,000 could carry the whole project.

Trump dropped residential conversion. They modernized lobby and systems. When the rental market turned, they were ready. The building is worth hundreds of times what he paid.

Everyone said office would not work. His instincts said otherwise. Ross gave him a structure to act on that instinct.

Know what you want and keep it to yourself

To build Trump Tower as planned, Trump needed control of a site on Fifty-seventh Street owned by Leonard Kandell and leased to dying department store chain Bonwit Teller. Kandell wanted to own strategic land forever. Trump wanted a long-term lease. Rent demands stalled talks.

Meanwhile, negotiating air rights from Tiffany next door, Trump learned Tiffany also held an option to buy the Kandell property at fair market value. Critical information. He did not show how much it mattered.

He let Tiffany think he only cared about air rights. They sold air rights and basically threw in the purchase option as part of the package.

Then he told Kandell he no longer wanted a lease. He was buying, using Tiffany’s option.

Kandell did not want to sell. Trump did not really want to buy. With new bargaining power, they reopened lease talks. Kandell agreed to terms they could both accept. A friendship with his heirs followed.

Trump’s point: do not lock yourself in early. Gather information. Change direction when new facts appear. He calls it devious. He says he is too busy for devious. He just absorbs information fast and moves in ways the other side did not expect.

Write objectives before you negotiate. Anticipate what they want. Set parameters so neither side gets trapped. Know your bottom line. Keep it private until the right moment.

Make sure both sides come out winning

In The Art of the Deal, Trump described buying the Hilton property in Atlantic City for 320 million dollars. Trump Marina today. At the time it was the biggest gamble of his career and front-page news.

Steve Wynn, biggest casino operator in Vegas, launched a hostile bid. Hilton picked Trump as white knight.

Trump still prefers staying at Trump Marina when he is in town. The win still tastes good. Key lesson: let everyone come out a winner. No rancor in the victory.

There was plenty of drama with Wynn involved. Heavy hitters competing. Trump loved it. He bets Wynn did too. They remain friends.

Wynn lost the property but his reputation grew from the fight. In a good negotiation, all sides win.

My take

These three ideas fit together. Instinct gets you moving when consensus says stop. Secrecy buys optionality as facts surface. Win-win keeps doors open for the next deal.

The Kandell story is the clearest lesson in information advantage. He did not lie. He just did not volunteer how much Tiffany’s option changed the game.

The Wynn story is Trump at his most generous in print. Competition without lasting enemies. Whether that matches every real-world Trump deal is a fair question. But as a principle, it beats scorched earth.

If you are building anything big, these tactics are worth stealing even if you skip the hair jokes.