Negotiation is a tricky thing. It can be painful and the consequences of doing it badly can be costly. Today’s guest post is by corporate law specialist Andrew Stilton who has negotiated more deals than I’ve been on miracle diets and with considerably more success, I might add.
There’s a school of thought that a successful negotiation means winning every single point. But that approach can be counter-productive, not least because it encourages the other party to be equally intransigent, which can make the transaction extremely painful for all concerned and even cause a good deal to be lost.
1 Leave something in for the other guy
The best negotiators make sure that, wherever possible, there’s sufficient in the deal for the other side. This isn’t based on altruism but rather because many deals experience post-completion “issues” and people are far more likely to resolve these in a sensible, commercial way, rather than rush off to the courts if they are, overall, happy with the deal which they’ve signed.
Read more on negotiating win:win deals here.
2 The upper hand can move around the negotiating table
I’m by no means a believer in karma, but sometimes an overly-aggressive approach can backfire spectacularly. On one occasion, some clients of mine were selling a company which was struggling. The buyers and their advisers were determined to fight tooth and nail to win every single point, because they felt that they held all the aces.
At 8.00am on the morning of completion, there were still a couple of issues to be resolved but then we discovered that the buyers were desperate to announce the deal to the market by 9.00am, in advance of their AGM later in the day.
The boot was suddenly on the other foot and so my clients and I decided to have some fun and, over the next fifty-five minutes, systematically and successfully re-opened all of the major points which we had been forced to concede earlier in the negotiations.
3 Give on the small things but stand firm on the big ones.
The best negotiating team I ever worked with was for a company client who fielded Mr Nice … and Mr Even Nicer: between them, they readily and cheerfully conceded all of the peripheral points but, in a very charming way, held firm on all of the points which potentially had a real financial impact, rather than esoteric legal points.
They had worked out in advance which points were the real “must-haves” and made sure that they won every single one of those.
4 Get real – you know what’s reasonable.
As lawyers, of course, what we regard as eminently reasonable when acting for a buyer will be dismissed as totally unacceptable when acting for a seller.
The reality, though, is that most of us act regularly for both buyers and sellers and borrowers and lenders and know pretty much what the legal agreements are going to look like at the end of the day.
It’s much better, therefore, to produce draft documents which are very close to where they expect to end up and then negotiate sensibly, while leaving the other side with a few “wins” to make sure that their honour is satisfied.
Here are 3 more negotiation rules well worth sticking to if you want to get a great result.
Andrew Stilton is a corporate lawyer for Keystone Law and also happened to be the lawyer who managed the sale of my own business. He did us proud. Read more about Andrew here