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Negotiate Like a Pro – A few observations

  • Date: Monday 19th September 2016
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Negotiate Like a Pro – A few observations by Shaf Rasul.

 

The process of negotiation is the art of careful discussion with understanding of mutual goals, and sometimes of the necessity of making concessions, in order to facilitate a deal that’s right for everyone – after all, a deal really only works if it is win-win for both parties.

I have negotiated many purchases of assets and businesses over the years. There are tough negotiators out there, and many tactics that they can use to turn a situation to their advantage.

I was recently involved in a transaction to acquire a substantial Scottish property company. In the end, I just couldn’t get the deal to work; if I had agreed to all the terms that were gradually introduced into the contract, it would have been a noose around the neck of my company.

I tried unsuccessfully on several occasions to get it to work, but unfortunately I just couldn’t get it over the line.

The person on the other side, who I have a lot of respect for, was a wily businessman who had over 50 years of business experience – a real master negotiator, to say the least.

Nevertheless, when good negotiators like him use effective tactics, there are always counter-tactics, measures and different approaches that can be deployed in order to reverse the situation, or at least get you back on an even keel. I have highlighted a few of these below and provided tips on how to meaningfully engage and put yourself in a position to successfully deal with each scenario.

 

Good Cop / Bad Cop

I always try and negotiate with decision-makers on a principal-to-principal basis. In a recent deal where I was discussing head of terms, the seller asked an advisor to sit in on the discussion - and the advisor just happened to be a solicitor. This ‘advisor’ then went on to tell me why the deal wouldn’t work in its current format and suggested alternative ways of framing the contract. Of course, this new spin in the contract resulted in more concessions to the seller. So how did I get over this tricky hurdle?

Personally I find the best way of approaching this circumstance is to either look to take things back to basics and negotiate with just one person at a time, or alternatively ask someone to join you. Under the circumstances, I called my lawyer, and put him on loud speaker so he could give his input into the matter.

Tip from Shaf: Always try and negotiate with the decision-maker on a principal-to-principal basis.

 

The Walkout

What to do if the other side backs out of a deal or threatens to walk out just before it’s about to be concluded, insisting that concessions must be made in order to make the deal work?

If the concessions are minor, then you may consider it. However, the downside of giving concessions at such a late stage is that you may yet have another bite at the cherry, so perhaps it’s best to just sit tight.

The best course of action, which I didn’t do in the above scenario, may be for you to also walk away, but put the ball firmly in their court before you do so. Tell the other side you will do the deal, providing they stick to the agreed terms.

Of course, it’s a risky strategy, but you shouldn’t bother contacting the other party and be seen to be doing the running. If they are serious about doing a deal, then they will contact you, and the boot will be on the other foot when you sit down at the negotiating table. If you do get tempted to call them, leave it for at least a month. The longer you leave it, the stronger your position.

Tip from Shaf:  In most instances, the threat of a last minute walk out just before the contract is concluded is usually a bluff.

 

Introducing a new decision-maker

On the tricky deal I mentioned earlier, I was negotiating with the owner of a company. We agreed a deal, shook hands on it, and passed it to our respective lawyers several days before we were due to pay up on each side.

He then shifted the goalposts, calling me to say that his wife wasn’t happy with the deal, and asked for more concessions. In fairness, his wife was a shareholder, and my response was to get her involved in the negotiation.

Therefore, a simple rule of thumb is to avoid negotiating until the ultimate decision maker is present. You may think that you’re talking to them, but that may not actually be the case.  

In some other instances, I have found that people will suddenly say that they need to check with the bank before agreeing a deal. In other words, the bank may be the ultimate decision-maker. If that’s the case, always find out what the bank’s criteria is at the outset of the negotiations.

Tip from Shaf: Always negotiate with the organ grinder

 

 

Keep checking here for more smart business tactics from Shaf Rasul that can help to put you in the driving seat for enduring success

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  • Report Andy B: 813 days ago

    You are giving our secrets away!

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