Good negotiating skills are an acquisition essential. At every step along the way, buyers and sellers find themselves negotiating over something. In the early days it will be over the indicative price, then it will be the Heads of Terms, next it will be the access for advisers carrying out due diligence and so on, until the Sale and Purchase Agreement is finally signed.
The high stakes and high pressure of M&A negotiations make careless mistakes easy and therefore the more you know, and the more you practise, the better you will be when it really counts.
As is implied by the title of one of the most famous books on the topic,[1] negotiation is about reaching agreement. No surprises there. The problem is that both sides are trying to reach a joint agreement starting from different points with different ideas on what they want. In most negotiations neither side actually has to settle, so coercion or large-scale trickery is really not going to work. The other side can simply walk away if it feels it is being manoeuvred into something unsuitable. Negotiation therefore involves persuasion. It also involves power and it is no good pretending otherwise. As President Nixon was fond of reminding us, ‘when you have them by the balls their hearts and minds tend to follow’. The cooperative ‘Getting to Yes’ school of negotiation tends to brush this aside. But, as neither side has to reach agreement, the aim throughout should be an agreement which leaves both sides feeling positive about it. This is the ‘win-win’ of popular books on negotiation.
Win-lose is where all the excitement is and there is an argument with M&A negotiations which says because this is a one-off event and you do not have to work with the other side afterwards, screwing the other side is OK. There is some truth in this and we will look at the win-lose negotiating style later, but for now the important point to recognise is that ‘win-win’ is not the same as splitting the difference and it certainly does not mean both sides get the same thing. With ‘win-win’ the other side has to feel satisfied but perhaps not as satisfied as you.
Actions for a win-win negotiation are fairly straightforward. First make sure everyone understands. Signal clearly that your intentions are for a win-win negotiation and get confirmation from the other side that this is their position too. From there it is a question of avoiding as much conflict as possible until mutual trust has been established (if you bear in mind that the root of win-win is cooperative negotiation, all this makes much more sense). This means tackling the problems with the greatest potential for a win-win outcome first to get a good head of agreement steam going. Reinforce the sense of cooperation by sharing information, even if this is not initially reciprocated. Avoid a defensive posture. Avoid a legalistic or contractual approach and when you make a fool of yourself (which you will) quietly and firmly apologise and return the discussion to the subject of the negotiation.
However desperate you are to do the deal, disguise it. Watch the body language, play cool, be brisk and business-like. For this reason, although you may get the upper hand by choosing the venue – they have to come to you if it is in your offices – avoid lunch or any social aspect so that you do not have to play genial host.
The aim of successful negotiators is to avoid getting bogged down in bargaining over, or from, positions (‘there is no way I am going to take the PCB dump as part of this deal’, ‘If you buy the company you take the people, the factory, the dump’). Interests are what are on the table and interests you must negotiate to get a deal. Positions are the Pretorian Guard of issues. It is a waste of time to try to knock them down. Go round them instead to reach a ‘win-win’ outcome. Appendix F gives a suggested checklist. To do this, of course, you have to have a clear picture of what the interests are on both sides. Which is why preparation is so important.
One of the main reasons people fall down on negotiations is lack of preparation. We all have a tendency to ‘wing it’ and rely on our wits. Besides, preparing for a negotiation definitely comes under the ‘too hard’ heading. Hard it may be, but if you want to do well there is no escape. To be a good negotiator you have to be prepared to prepare.
The first thing to think about is about the procedure itself. Next be clear on what you want to achieve and, just as important, what is not acceptable. Finally set the walk-away point – be prepared to walk away if the deal is not right for you, this is also known as the ‘BATNA’ which is explained later in this chapter.
Before you get into the detailed process of bargaining and compromise, draw up a list of things you need to establish with the other party. One of these should be the procedure for the negotiations themselves. Discuss this with the other parties with the objective of creating an environment for constructive negotiation.
For a Sale and Purchase negotiation, the core principles[2] might be that:
There should be only one draft of the agreement prepared and negotiated
The single text is to be prepared by lawyers from an independent law firm agreed upon by the parties and which has not represented any one of them in the past
The first draft would be based on what the negotiators had already agreed
The independent lawyers would be present at all negotiation sessions as observers, advisers, note-takers and, ultimately, drafters
The only other people present at the negotiation sessions would be from the parties: business people, negotiators, in-house counsel
External lawyers and other advisers would be excluded from the negotiation sessions. The parties would deal with them outside of the sessions
Each negotiator would be fully empowered by his/her appointer to make decisions that would bind the appointer
Venue to be your offices (preferably) or a neutral venue but never at their offices
Everyone is working to an agreed and well-defined timetable
Negotiation is a process of trading. You will not negotiate successfully if you do not identify what your interests are: what are the needs, desires, concerns, and fears that have to be addressed in the negotiations?
Once identified, interests can be prioritised. The aim is to get to the point where you can say that unless certain interests are addressed to your satisfaction you are better off not entering into an agreement.
This means developing real alternatives to entering into the agreement; alternatives that are achievable and that will meet your interests. Setting out the ‘best alternative to a negotiated agreement’, or BATNA as it is more commonly known, helps you focus because it tells you that there are alternatives, see Figure 7.1 below.
As the figure shows, BATNA is a way of structuring the decision on how far to go with negotiations. First list all the alternatives, and then look at the most promising in more detail (assuming all are practical propositions). Select the best of these and compare this with the alternative of continuing negotiations (and the compromises you are likely to make). If continuing negotiations is the best option then that is what you do. BATNA forces you to understand why you are doing the deal and gives you a pretty good idea of how strong your bargaining power is. The better your alternatives, the better your bargaining position. Think of this in personal terms. How much better do you think you would be at negotiating a pay rise with a job offer in your back pocket? If your bargaining position is not as strong as you would like, try to improve your BATNA before sitting down to negotiations.
Bargaining power is a relative concept. It is measured relative to your BATNA, but it is also measured against the other side’s bargaining position. Having mapped out and prioritised your own interests do the same for the other side. Try to put yourselves in their shoes. Try to envisage what their interests are, what their alternatives are, and how the various matters can be dealt with in the final agreement. Solving the other side’s problems is the best way of solving your own. As a negotiator, your job is to persuade the other side to say ‘yes’ to a proposal which meets your interests better than your no-deal option. For them to agree, your proposal must be better than their no-deal option. What you are trying to plan out is how to protect your interests, that is, how not to give too much away, by understanding where their interests lie and then persuading the other side that agreeing with you is in their best interests. It is the art of negotiation known as letting them have your way. Understanding where they are and building a bridge so they can reach your desired end point is much more effective than trying to push and shove the other side from its position to yours. Once you sit down to find out about the other side you will be surprised how much information there is out there.
From this you can map out various areas of interest, as in Table 7.1.
Table 7.1. Areas of interest
Interest | Type | Description/objective |
|---|---|---|
Mutual | Like | Interest that each party has and will want satisfying |
Complementary | Different | Interests that each party has but which can be satisfied in a way that leaves everybody happy |
Neutral | Different | Interests that cannot be satisfied without affecting the interests of the other party |
Competing | Different | Interests that cannot be satisfied without affecting the interests of the other party |
The map is used to think of options and packages that might be proposed. These options and packages are used to plan the negotiator’s approach. The aim is to ensure that the negotiation flows so that mutual, complementary and neutral interests are addressed before competing interests.
Even for one-off negotiations building a relationship is the best way forward and dealing with the easiest areas first ensures an atmosphere of cooperation in which to address the competing interests.
Preparation on this scale means that you can think through your aspirations on each matter, with each aspiration grounded in reality, but set above the walk-away level.
Overall, the aim of the preparation is to go to the negotiating table:
Knowing the mandate of the negotiator
Knowing the walk-away points and having a good idea of where these lie for the other party
Having improved the alternatives to a negotiated agreement (if at all possible)
Knowing and having thought about your own interests
Having thought about the interests of the other parties
Having prepared mutually beneficial options and packages that could address competing interests
Knowledge is a major strategic weapon and these are really nothing more than the fundamentals – what is being negotiated, what your goals are, what your points to concede are. In addition, if you know your weak spot, it will be easier to conceal and if you can find the other side’s, so much the better. Finally, good preparation minimises the risk of needing a piece of information on the spot and being unable to access it when the pressure is really on.
A negotiation is not a battle. The principles of good negotiating are:
Each side shows concern for the other’s objectives
Each side sees the other as fair
The outcome is win-win
Each side feels it would enjoy negotiating again
The aim is to reach an agreement without leaving money on the table. In order to win the best from any negotiation, a blend of three important attributes is necessary:
Skill comes with practice, familiarity and watching others, but the more familiar you are with what makes a good negotiator, the better.
There are a number of common characteristics which distinguish good negotiators. Good negotiators:
Say very little but listen carefully
Are not overtly aggressive
Are shrewd
Have ambitious goals (i.e. high aspirations)
Never concede without gaining an advantage in return and then concede only slowly (see below under ‘Trading concessions’)
Look for inexpensive concessions to trade for valuable ones
Have influence and the ability to use it
Have credibility and respect from the other side
Have empathy for others
Have agile minds and a capacity for sustained concentration. Negotiations always require quick thinking and the ability to concentrate on what is important
Can think clearly under stress
Above all, they are characterised by the four Ps. They are:
Patient
Positive
Placid
Prepared
They also understand the rules of arguing, the dos and don’ts of which are outlined in Table 7.2.
Table 7.2. The rules of arguing
Do not | |
|---|---|
Make only a few points at a time – mention only a couple of the strongest points in your favour | Interrupt – you need to concentrate on picking up signals |
Demand point-by-point justification of the opposition’s case | Provoke, say by raking up old disagreements |
Build up a case logically and carefully before drawing the conclusion that you disagree with the other side rather than the other way round. Saying you disagree and then why will only encourage the other side to argue point by point | |
Check out their priorities | |
Listen carefully and be positive | |
Avoid point-scoring, uttering threats or anything else that will inevitably fan the flames | |
Seek clarification of the other side’s position through neutral summaries of what you understand their position to be | |
Question – what areas are still open? What suggestions do the other side have? What, exactly, is the foundation of their case? | |
Seek new variables – what else can be brought into the negotiations? | |
Listen carefully – you need to concentrate on picking up signals | |
Be positive – concentrate on how things can be improved |
The more successful party will usually be the one with the higher aspirations.[3] Aiming high means making high demands. While there is always the danger that high demands will turn the other side off, exaggerated demands can always be reduced and therefore they give headroom for making concessions. When it looks like you are making concessions the other side will believe they are winning. Do not talk yourself down by being too anxious to please. The other side will chip away without help from you, so don’t help them.
Power is the capacity to influence the other person. There is always a link between power and results in negotiations. When one side has a strong power base, the differences in performance between skilled and unskilled negotiators become smaller. It is vital to build up a power base, whether it is real or apparent. A power base can be built up by having no real need to settle, little regard for the other side’s status or power and personal confidence. Aiming high means behaving as if you have power. Indeed negotiations can often be influenced if the other side merely believes you have power. First impressions are particularly important and are aided by both building up a logical argument and by relaxing and avoiding over-aggression. In other words, power and confidence go hand-in-hand, underlining once again the fact that negotiations need to be well-prepared and well-planned.
However, power is easily abused. Be sure that weaker parties are not frightened away from the negotiating table thus leading to a lose-lose outcome. The movies may be full of tough guy negotiators bulldozing the other side to get the lion’s share of the spoils but real life negotiations are 50 per cent emotion and if the other side thinks it is being bounced into something which is unfair, damages its reputation or damages its self-esteem, it is much more likely to call the whole thing off even if it is economically irrational.
At the other end of the power spectrum:
Do not negotiate when you have nothing to bargain with, or when broader objectives might be prejudiced
Do not be caught ill-prepared by having to do quick deals
Assess the other side’s power base. It will usually be overestimated, so try to verify it in the preparatory phase. This observation leads on to a much wider principle which should always be borne in mind. Perceptions are everything and what you really need to understand are your opponents’ perceptions. Get inside your opponents’ head. The really expert negotiator is the one who mentally sits in the chair opposite.
Where do you start? Unless there is a really big issue which if not resolved will mean no deal, start with points that are likely to bring the two sides together. This serves two purposes:
As already mentioned, it is the ‘getting to know you’ stage
It allows you to gather information. You can use this stage to find out what is motivating them in order to gauge their real needs rather than their desires. You should also assume that the same tactic is being used on you so do not give too much away!
It pays to concentrate initially on building a working relationship. People negotiate better with someone they trust. Negotiation is a highly sophisticated form of communication. Without trust, there will be no communication but instead manipulation and suspicion masquerading as communication. Be trustworthy. Honour your commitments. Tell the truth. Respect confidences. Make sure your word is your bond. If you do not show trustworthiness and commitment, why should the other side?
Language (and body language which we will come to later) is very important in building a relationship. For example it is not a good idea not to counter the other side’s proposals by openly disagreeing. ‘I see what you are saying, but...’ is not a great opening. Much better is ‘I understand your point of view and...’ because you are being inclusive, constructive and building on their foundations. Do not just say ‘no’ when rejecting suggestions from the other side. Explain why so that the other side can find alternatives. Be sparing with the word ‘but’ as it signals a negative approach. Get the negotiations back into a positive frame by asking directly about the other party’s concerns (having spotted the ‘but’ as a sign that they have concerns) and address those concerns positively.
However, this is not just a cosy chat. Your job is to get the other side to agree on terms which are favourable to you, so do not forget some of the old salesmen’s tricks such as asking, ‘where will you put the sofa Mrs X?’, thus planting the idea in the head of the would-be house purchaser that the deal will be done. You can also try the old double-glazing salesman’s trick of manoeuvring your questions so that the other party can only say ‘yes’ to you. The more they become accustomed to agreeing with you, the smoother the negotiations will be. Both approaches also have the advantage of keeping the other side relaxed and therefore likely to give more away.
Of course these tactics will be played on you too so watch for ‘yes’ tags such as ‘don’t you agree?’. Become a fly on the wall so you can assess what is truly going on. If the ‘yes’ tactic is worked on you, always qualify your ‘yes’: ‘yes, providing...’.
Nor is negotiation about fast talking. When talking, be relaxed and fluent but above all learn to shut up and listen. No matter how well you have prepared, you will not know everything about the other side’s interests. Always question what the other side really wants and probe for this. Always try to find, so that you can exploit, the other person’s fears. These will be a mix of:
Emotional
Personal
Objective i.e. fear of not getting certain points agreed
Fears may be based around losing face, or undermining relationships with colleagues
Other people
Being inadequate
To confirm the interests and fears of the other side, ask questions. Questions will have to be a bit more subtle than simply ‘what’s your worst nightmare about this?’, but ask lots of them and listen. Where do they stumble and stutter? The inexperienced negotiators are the ones who do not listen. Listen not just to the words but also to what is being said. Also observe and watch the body language. Above all, do not be forever thinking about what you are going to say next.
Do remember, though, that there are cultural differences as to what questions can be asked and in what way. Direct open questions are fine for Americans but not for Japanese. Remember also that the message may not always be ‘up-front’. It will with Americans but not with the Japanese.
As the discussions proceed, move from non-directed, open questions to more specific questions on the broad issues and watch the responses very carefully. Do they try to sidestep you? If so, try again but be even more direct – but without being aggressive. Watch the body language while you do this. If they are still sidestepping take note of the question. This is obviously a sensitive topic. Then you either:
Back off and approach the same issue a little later from a different direction, or
Imply that you already know the answer – so there is no point them holding out, or
Use silence. Ask the question and simply keep quiet until it is answered
Listening produces silence. Silence can be a very effective negotiating tool. Do not feel the need to fill the gaps (most people do). Ask the question and shut up. Make the proposal and shut up. Wait for the other side to respond until you speak again. Silence is a frighteningly powerful weapon which can force the other side to expand on their statements and sometimes to modify them. How many times have you seen TV reporters use it to great effect? Use silence as well to counter incomplete or dubious statements. Silence with raised eyelids and a slight raising of the eyebrows is a real killer.
Both sides will be digging all the time, using questions to uncover the other side’s thinking. Many questions will be loaded, ‘when did you stop beating your wife?’ type questions. The best ploy is to answer them in a straightforward way: ‘People always ask me when I last beat my wife. That is a loaded question because they probably already know the answer. I’d also like to point out that some things, like domestic matters and our discussions here today, should be kept confidential. I am sure you do not want me to tell the world about the deal we are negotiating’.
Otherwise question the question but without too much aggression. You are trying to dismiss its relevance, not undermine the questioner: ‘why does my wife have any bearing on these negotiations?’ Tony Blair used to use this technique very effectively with Ian Duncan Smith. Duncan Smith would ask a question and Blair would reply along the lines of, ‘Of all the questions he could have asked, it should not have been this one’. The result was to get Blair off the hook and sound helpful and reasonable at the same time.
Of course when the boot is on the other foot, you want full answers to all your questions before moving on.
A lot of the stresses in negotiating come from the feeling that you are out of control. We will turn to some of the more obvious stress-inducing manoeuvres in a moment but remember establishing and keeping control of the negotiations can make all the difference so be the one to take the chair and be the one to sum up. Taking the initiative will not only help you, it will also gain you the respect of the other side.
Keep the plates spinning but be aware of unnecessary ones designed to bring you down and do not be afraid to ask for clarification or a recap of point agreed if things seem to be going too fast for your liking. Besides clarifying what has been agreed so far, this is a good way of slowing things down and breaking the other side’s momentum. Summarise regularly, and feel free to suggest a recess when you need time to plot your further course. Always:
Keep notes
Keep cool
Step back from time to time
The problem with aggression is that it kicks in the ancient fight or flight response. Be assertive but not aggressive. Assertion is getting your point across. Whatever happens, stay calm and get your point across.
If negotiations become heated and personal do not fight fire with fire. Maintain your position as an adult even in the face of outrageous provocation. The more heated they become the cooler you become. Use very long silences after verbal attacks to emphasise their stupidity. Make no reference to the attacks when you do eventually speak. Get back to the issue – and watch for any information the outburst may reveal.
If the other side is ranting and raving it is using more energy than you so will flag first. Just wait. Simply restate your position from time to time. Do not take aggression personally – it is a tactic. Continue to treat the other side exactly how you would wish to be treated.
At the opposite end of the scale, beware of nice negotiators. Do not let them lull you into lowering your guard and giving too much away. Do not think you do not need to prepare properly because the other side is ‘nice’.
Anger must be used sparingly otherwise the negotiator will lose control. It is best deployed to counter an outrageous suggestion from the other side – and it can be very effective if it gets the message across that one side cannot continue to treat the other like this.
Emotion can be used very effectively provided it is kept under control. As soon as a negotiator loses their temper they have given away control of the negotiation. However, the whole gamut of emotion can, should be and is used to put a message across. Culture often determines how much emotion can be used.
Experts are sometimes used to shift the balance of power. Always ask beforehand who will be present at any negotiation and their role. If a technical expert subsequently turns up, sidestep him or her by asking that things be put in writing so that you can get your technical experts to answer. On no account try to negotiate.
Veiled threats along the lines of, ‘there will be dire consequences if you don’t do this deal’ are either the stronger party hoping to gain an advantage or the weaker one hoping to hide weakness. Expose the threat by asking for clarification. Show that threats do not bother you: ‘do what you will but our view remains that ...’.
An ultimatum should only be used as a last resort. The weakness of the ploy is that it is often played too soon. Thus if someone plays the card against you, immediately make them think they are deploying it too early.
Do not assume everyone is entirely honest all of the time. It would be surprising if any negotiator ever was. Do not take everything at face value but do not tolerate out-and-out lies either. There cannot be serious negotiations if one side is lying. If you suspect the other side, first of all watch for tell-tale signs in their body language – hand over mouth, eye pull, ear pull, restricted movements. Then listen carefully to the content of what they are saying. A tangled web is difficult to weave successfully. Take regular breaks to review the information and ask for proof of their suspicious-sounding statements. All the time give them the opportunity to save face but if all fails, just leave.
A frequently used ploy is pretending to have misunderstood a point already agreed. This is done for one of five reasons:
To concede it to keep negotiations going
To slow things down
To retract a point already conceded without losing face
To buy time
To gain a concession
Another frequently-used tactic is to have a ‘goodie’ and ‘baddie’ on the other side’s negotiating team. The theory is that if the baddie does not wear you down you will be so relieved when the goodie takes over the negotiations you will concede almost anything. Of course you will not! What you will do is put a stop to it by:
Telling the other side it has been rumbled, ‘Oh no, not the old good cop/bad cop routine. Can we grow up and get down to some proper negotiations?’ might be a bit strong – after all, you do not want to embarrass them. ‘I can’t negotiate when there are two quite distinct positions’ might be better
Cutting out the hard man. A subsidiary of a Fortune 500 company was buying a small business run by two entrepreneurs. The big company man handled the negotiations on his own and was rightly also thinking about how to integrate the business afterwards. However he found himself in confrontational discussions about price and the deal with one of the sellers and then in consensus-driven discussions with the other one about how to work together in the new world. Of course the two entrepreneurs were liaising and manipulating the big company man, who tied himself up in knots and traded unnecessary concessions. He should have had a partner so the sides were more matched, instead of going it alone and trying to get a feather in his cap.
Explain to the friendly one that you can’t go on if the other one continues to play a part in the negotiations
If someone says something with enough confidence there is a pretty good chance it will be believed, especially if said from a position of authority. Take everything with a pinch of salt. Verify and question and watch for inconsistencies because, like lies, misinformation is difficult to maintain.
A very effective tactic is the use of blanket statements that close off options completely. Always question them. Some of history’s greatest leaders have relied on just such a tactic to build their arguments. Stalin, for example, was prone to using phrases like ‘it is true that’ or ‘it is axiomatic that’ when nothing could have been further from the truth or less axiomatic. If the other side comes up with reasons like ‘it is company policy’, look them in the eye and ask when the policy was set and by whom. If it is claimed that there is ‘only so much left in the budget’, ask ‘When are budgets set? When will there be a new allocation?’. If the response to your very reasonable offer of a trade is ‘I’ll have to refer’, who is the person who makes the decisions and can you speak to him or her?
In a similar vein, precedent is often used as an excuse, ‘we always do it that way, we can’t change now’. The answer is that this is a unique negotiation, times change, and negotiating could give a better outcome than precedent.
Another variation is the other side saying ‘I am sorry but...’ followed by ‘this is beyond my authority/I need to get approval from the boss/etc’. Take a good hard look at the excuse as it could be a bluff. If you think it is a bluff call it in the subtlest way you can.
This is a form of option limitation. In fact, there is no such thing. Everything has a value and all values are relative. When confronted with something ‘non-negotiable’, show that it troubles you and either:
Try to prise it open, ‘so if we meet all your aspirations on price and warranties, you will still want to keep the Wimbledon debentures?’, or
Set it aside. Move onto other topics where you know you can reach agreement in order to create a sense of momentum and achievement
However the negotiations subsequently go, make sure you exact a steep price for the other side’s intransigence – even if the non-negotiable item has a low value for you. After all, by billing it as non-negotiable the other side is basically saying ‘this is worth a lot to me’ and should therefore be prepared to trade a lot in order to secure it.
Do not be blinded by science or numbers. Make sure you understand. Of course you will be properly prepared so documents will be readily to hand, won’t they?
Trading concessions is the core of the negotiating process. The golden rules are always:
Trade, never concede
Remember that the philosophy underpinning negotiation is normally ‘win-win’
Keep things in perspective. Know what the important issues are and concentrate on winning them. Your aim is to win the war
Reward positive signals from the other side – frequency of concession counts for a lot more than size of concession
Give concessions you do not mind losing. Although there must be give-and-take, try to take more than you give as far as your own values are concerned, that is, always trade something that is worth more to the other side than it is to you. The win-win comes if your minor points are the other side’s major points and vice versa
Your concessions should be small and tentative, but regular, in order to encourage the other side to respond
Remember the other side will be doing exactly the same, presenting concessions in a way which is attractive to you but will be looking for something which is favourable to it. The key to all successful negotiations is seeing what lies behind the positioning
Accept concessions grudgingly and minimise their value to you
When you concede, make your opponent feel that you have given up something which you really value
Be alive to other trades that might enhance your position. Sometimes there is an opportunity to get something even bigger: ‘If we are doing that surely it makes sense also to do this’
Look for opportunities to link one concession to another
Look out for trump cards. A trump card is something you have that isn’t worth much to you but is worth loads to the opposition. Explain in the negotiations that you couldn’t possibly satisfy it. Show reluctance to discuss further. Gain a hypothetical concession in the unlikely event that you can fulfil it. Try to gain agreement to all your remaining objectives. Play the trump card
Remember, there is nothing you want at any price
Never offer to split the difference early on. It is a sign that you are not comfortable entering into a lengthy negotiation. Splitting the difference only makes sense at the end and then when the difference is small. When you split the difference, emphasise the sacrifice you have made.
Pressure devices are an extreme tactical ploy designed to bounce or scare the other side into an agreement.
Again a favourite of the double-glazing salesman for example ‘we can offer you this deal but will have to agree now’. The effect is that the buyer usually slams on the brakes. This is absolutely the right thing to do. Do not allow yourself to be rushed. Much of the ‘high pressure’ of high-pressure salesmanship is in fact a form of bullying. If this is a good deal (for you), why must it be done in such a hurry?
From your perspective, making your opponent sweat a little may at times be appropriate. If they are pressurising you with deadlines, for example, putting the deal in doubt may be the best way of regaining the upper hand. Whatever, the aim is to seize the initiative and put pressure on them. You hope to distract them from the key issues and make them focus on just getting the deal done. Tactics you might use include:
Playing the reluctant buyer/seller
Creating your own ‘higher authority’ as a stumbling block
Suspending negotiations altogether
Withdrawing an offer already proposed
Creating the impression that their tactics have caused you to lose heart and that you see little point in continuing
There will always be one. It is another pressure device. Do not start conceding to keep the deal on the table. When they ask for your suggestions on how to keep things moving, the answer is a question, ‘I’m not sure, what do you suggest?’ With any luck they will respond with solutions and the whole thing will be back on again. Or they will realise what you are up to and respond in kind. Trench warfare will ensue, which is no good for either side. Instead let them believe that they are the better more experienced negotiator by getting them to tell you what needs to happen next, something like, ‘We would really like to find a way to do this deal but not at this price. What would that way be?’ If it is a fake stalemate the other side will normally respond. If no concession is made there really is not much point negotiating further unless you change your position, so either do that or leave. If you leave, leave the door open for them to come back to you with a solution.
You know the story. After weeks of hard work, late nights and worry the deal is finally in sight when the other side pops up with a last-minute change: ‘we cannot agree unless we get b, c and d’. It is funny how this seemingly now vital condition has not been mentioned once in the preceding negotiations. Goalposts changing right at the end may well be a bluff. Do not bluntly call it because doing so is tantamount to calling the other side liars. Stay cool and in control, appear to go along with the new circumstances but expose the disadvantages to them of changing the deal.
From your perspective, there is nothing wrong with using afterthought as a lever. Agreements are reached on a package. If a deal is stacking up well it will gather its own momentum. Furthermore, a lot of time will have been invested. A point late in the negotiations, when all looks to be heading for a successful conclusion, can be a good time to introduce something you want. Agreement is much more likely if it looks like everything achieved so far will be wasted without it.
Deadlock might seem uncomfortable but is perfectly normal and anyway there is not much you can do about it immediately so relax and enjoy it! The party which offers the first concession will usually be the less successful, so delight in doing nothing for a while.
Having, of course, predetermined your fallback position, you are going to stick to it. The other side will normally offer alternatives. All new offers should be treated as fresh negotiations and beware of the counter offer that is actually totally different from the original offer.
If you want to try breaking the deadlock try the following:
Look for a new angle. Try to find new ideas based on the other side’s real wants
Take a break from formal negotiations and talk informally
Create a diversion – change emphasis, location or people
Make a (reluctant) offer of an unwanted concession
Suggest a trade-off of a concession already agreed
Propose a recess
Restate and clarify both sides’ positions showing areas of agreement and barriers to progress
Trade minor concessions for a major move in your direction
Then consider the following:
Issue a deadline
Get them to put their cards on the table – how keen are they really? What are their most and least important concerns?
Shame them. Ask straight up why all these meetings and no progress, then propose an alternative schedule
Put them on the defensive with some heavyweight demands. That should reveal their true hand
Show the other side you are in no rush and can live without this deal
If all this fails, the next step is getting up and walking away. It is a powerful tactic and widely used. Don’t use it:
Until you have tried everything else you know
If you believe there is still a chance of reaching an amicable agreement
Unless you have calculated your alternatives and know you can afford to walk out
Unless you are prepared to have your bluff called and lose everything
But if then the other side will not budge, get up and go. Do not make it confrontational and do not burn bridges. Leave the door open for negotiations to restart.
Body language is very important. It makes up 55 per cent of all communication and is therefore well worth understanding.
An open posture involves standing or sitting with the body facing the other person, hands palm up and on show, head lifted in interest, eyes open, legs and arms uncrossed. It indicates:
A willingness to listen
A feeling of strength
Openness of mind
Possessiveness
A closed posture involves standing or sitting with the body away from the other person, hands palm down or hidden from view, head down and eyes partly closed or constantly looking away. It indicates:
A defensive attitude
A negative attitude
An unwillingness to change mind, thought or position
Facing someone, crossed legs are defensive and negative. Sitting next to someone if they cross their legs towards you indicates that they are comfortable in your presence and are willing to engage in conversation. If they cross them away it says the opposite.
Leaning towards another person and entering their space indicates a willingness to be closer in mind to that person. But too close and it becomes threatening. Use ‘towards’ positioning to indicate a willingness to change. Leaning away means you are trying to distance yourself from their point of view.
The position of the upper eyelid relative to the iris tells all. The higher the upper eyelid, the higher the interest. If you can see the white above the pupil it indicates that the other person is experiencing shock or surprise. When the eyelid is between the top of the iris and the pupil it indicates a high level of interest. If the upper eyelid is level with the centre of the pupil, interest is flagging and when it has fallen below the pupil it indicates boredom.
All the sales books put emphasis on testing for the green light. Do not miss the signal to agree and continue negotiating. The green light is the finishing line – you can stop. Spotting the green light is a matter of spotting when the negotiator starts to relax. When they are thrashing through the negotiations their mind is working hard. Their body will be alert and upright to reflect this. As soon as they have made a decision their minds will slow down and their bodies will relax as well. Test for the green light by asking for agreement to take the deal onto the next stage. Then say nothing. Add anything more at this stage and you will only end up conceding more than you need to reach an agreement.
Signals are a vital part of negotiating, whether you are giving them or receiving them. They can indicate the style of negotiation, what you (and the other side’s) needs are, degrees of commitment and areas for profitable exploration. Beware of giving unintentional signals.
Open gestures say the other side is at ease with what you are proposing. ‘Towards’ motions are a sign that you have raised a point of interest. Jump in quick with an open question to understand what interests them and why.
Signals should not be ignored, unless they are false. When received they should be explored.
The default option should be to seek a win-win outcome, so that both sides can obtain the best overall result. However, if the other side goes for a win-lose outcome you should also revert to an aggressive, competitive, win-lose approach. The cooperative approach will just not work in such circumstances as it requires both sides to negotiate. Similarly, there may be times when you feel just so overwhelmingly powerful that ‘win-win’ is unnecessary.
A win-lose attempt against you must be resisted and, if possible, penalised, to protect future negotiations. After that to defend against win-lose:
Dig in early and present clear, but unemotional, opposition
Exhibit rock-solid confidence
Keep a balanced and detached view
Keep control of what you are prepared to discuss and in what order
Monitor carefully the pace and atmosphere of the discussion. Be prepared to redirect it if necessary
Avoid initially either an aggressive stance or, for that matter, a defensive one. Both can be a stimulus to fighting
Seek an exchange of information to clarify each side’s position
Stress the consequences to the other side of failing to resolve the issue. The intention here is to enhance mutual respect, while indicating quite clearly the predicament both sides will be in if they fail to agree
Try to set up a shared problem-solving mechanism to move the other party to a win-win stance
Win-lose, being competitive, may be preferable where you know for sure you can win a power struggle. To succeed in a win-lose against another party:
Make clear your absolute commitment to what you must have
State what the consequences will be if you don’t get it
Try to prevent your opponents from specifying their commitments. If they do, provide some sort of face-saving exit for them
Your objective is to convince the other side that the best outcome you could accept is the least you can possibly expect. However, it is a negotiation so you will have to trade concessions. The skill is slowly and painfully giving small concessions in exchange for big ones
If you find yourself on difficult ground, be prepared to be flexible by changing topic or tactics
Negotiation is concerned with resolving conflict usually by trading concessions. Trust, not trickery, is an important requirement for successful negotiation. Negotiation does not always have to imply confrontation, although it may sometimes require an element of brinkmanship, which is why skilled negotiators conclude better deals. Nevertheless, sustainable results are more often reached when all parties perceive the process as straightforward and fair. Plan as thoroughly as you possibly can:
Establish your aims
What are the key aims?
What relative values do you place on them?
What is your negotiating range?
Get information about the opposition
Answer the above from the other side’s point of view
Remember negotiation needs both intuition and logic. Logic by itself produces the out-of-control spirals seen when computers trade shares. In such instances, intuition would say there must be bargains to be had in big sell offs. Plans are a support only – there are times when you may need to ignore plans despite the effort that has gone into them. It is a bit like having a shopping list but still wanting to take advantage of the 2-for-1 bargains. You have to be sensitive to the moment but on the other hand too much intuition means that decisions are taken too quickly. However, negotiations take place in real time so a skilled negotiator has to be able to go with the flow and trust instincts. The subconscious will have picked up what the conscious has missed – body language, tone of voice etc. Try to access the subconscious by self-questioning. If it feels wrong it probably is. Practice makes perfect and good negotiation skills are transferable. Watch other people negotiating and learn from them.
Reach for compromise
Try to give them what they value and you do not, and
Gain what you value and they do not, but
There will be issues which are important to both sides