A great negotiator will not just work through the ‘deal breakers’ but aim for the win-win –that silver bullet of a fair and equitable solution.
There is no adjudicator when it comes to negotiations – no red card, whistles or sending off – it’s not often a fair process, even though there are rule adherences, but then that doesn’t mean it can’t lead to a ‘fair ‘resolution. As a negotiator you are always working for one side, but it would be a failing not to have empathy for the other party. The key to making negotiations work is to understand what the impact and gains are for both parties and how to make the outcome as equitable as possible.
Someone once said to me — "if you do a deal with a party and you take too much off the table because of their position, you will never do a deal with them again!" — I do believe this to be true!
Here’s an example from a recent role I took on. It was a fly in, fly out three days. I had to deliver, and the starting point was a stalemate.
The Case Study
I was approached by a Private Equity firm to work on the acquisition of a business that had been ‘overvalued’. A £500m family business - the current negotiations had broken down dramatically causing a heady combination of hostility and fear.
After initial conversations, held separately with both stakeholders and their legal advisors, I rapidly concluded that mistrust was rife and there was a lot of ‘game’ at play. The Private Equity firm felt the initial agreed price was too high and as expected they were gradually chipping away – well sometimes taking large chunks out of it. However, the price was paramount to the selling family and time was of the essence. There were no other interested parties but being a family business, the emotional stakes were high, and they couldn’t accept they didn’t hold many of the cards. There was a glimmer of hope though as the independent third-party valuation range covered both the price points that would be seen as ‘acceptable’ to each party.
This created a scenario where an equitable solution could be found using creative financial mechanisms – in this case a combination of up front and scheduled delayed payments. The key being that the solutions had to be tailored to the deal breaker issues held by both parties. These mechanisms are generally conjured up by the legal teams who are truly invaluable when out of fight mode.
By changing the attitudes and atmosphere and getting both parties to understand that at the fair price bothsides would concede a similar equitable amount, not based on the last point of negotiations but from the fundamentals of the deal when both parties agreed to enter into contractual discussions.
Simply put – by listening to each respective parties “deal breaker” issues and using the accomplished legal teams from both sides to come out of fight mode, we could move into a constructive and creative solutions focused approach.
The Outcome
Many meetings were held, as a group and individually – elegant solutions were developed and constructed (usually in the night-time hours) with deal-breakers solved. Within two days the deal was done with a handshake, with no secret squirrels in the legals, and was signed 36hours later.
Hugely exhausting but a result. By using humility, kindness and thinking of solutions instead of a sledgehammer we were all able to crack the nut.
My personal top-tips:
Understand and forgive the emotion and let parties speak and listen
Prepare and figure out solutions to the deal breakers – start working early on this – don’t leave it until the end or things quickly unravel <Handling Objections>
Maintain or work towards a state of equity, find the ‘win win’ – it isn’t always about the money
Understand that some deals just don’t work
Get to know the people you are working with, there will always be something people have in common that is more than just the weather, recognise the human side and have some fun in the process
If you would like to talk more about this please do drop me an email simon.jones@fortitudelondon.com