The true goal of any negotiation is to close the deal. Not to make friends or find a compromise, but to seal the deal, legally. Benefits, losses, compromises, personal charm, networking, well-timed walk-aways, reconciliations, and what’s not are generously thrown into the big pot of negotiations to produce that neat document with signatures that finalizes the work invested by numerous people. One party gets the money, another one gets something they wanted, as the negotiation trainings teach. Everyone’s happy. The story should end here, till the next deal and negotiations. Right?
Unfortunately, no. As the number of recent business examples demonstrates, companies often regret hasting the deal and diving headlong into the offer without proper consideration given to the long-term effects. That is, the desire to gain in short-term time-span spells disaster for the future. The saddest discovery related to these regrets is that it was fully possible to foresee them and talk them through during the negotiations rounds. However, the desire to ‘win’ and short-term considerations often overweight common sense. Thus, we have decided to fix this problem and offer you tips on how to include these points in your discussion and avoid large-scale troubles in the future. More details and practical steps to take you can learn at some professional negotiation trainings, and now get your feet wet concerning this matter.
- Explicitly discuss long-term prospects and outcomes. Do not shy away from this topic. We all know that even in the best of times people tend not to talk about possible fails that may ensue from the deal. This caution is even stronger today when activity is low and any deal is considered a good one. You need to do the opposite. Involve legal advisers in your private discussions about the viability of this deal. Research the company you make business with. If you have any doubts, seek answers from the other party and do not take generalized responses.
- Take your time in negotiations, get to know better both the negotiating team and the company they represent. When you really understand the thinking and the background of the company you are negotiating with, you have all tools to assess the prospects of the deal objectively. If possible, visit the office of the company and manufacturing facilities. Ask about the corporate culture, hiring processes, and values (if you are buying a company). If you secure the bulk supplies of something, take care to research the origin of the supply. The ethical side of the business is as important for your reputation as the product quality.
- Prepare for the worst, desirably through negotiation trainings. Very often, while preparing for the major deal, people tend to look for information that supports their assumptions or relates to the narrow question only. Information that does not fit the nice picture is discarded or overlooked. This is a common cognitive bias, so please avoid it. If you see any negative details, explore them and envision how they fit into future operations. Can they grow into something unsurmountable? It is not panic-raising, it is being cautious.
- Have plan B included in the final contract. Yes, imagine that you ran into the conflict or found some deep-running troubles in the company you were not notified about. Yet the deal is closed, you are the owner, and you have to find the solutions. Would you like the sellers to be involved and held accountable? Sure thing. That’s why you need to include these provisions in the contract. First, you should have the legal opportunity to call the meetings with the other party and voice your concerns about dissatisfaction as long as the contract is valid. Second, you should have clauses that explain how disputes will be settled. If the other party in negotiations is reluctant to do so, it is a red light that something is really wrong.