Improve Your Negotiations With The 5 Golden Rules.   LEARN THEM

I recently asked two very successful negotiators for their top three most effective negotiation strategies. The first, Chip Fisher, is a long-time investment banker. The other, who asked for confidentiality, is the President of a large public company in the Midwest. Collectively, they have bought or sold hundreds of companies worth billions of dollars.

Interestingly, they independently shared the same three strategies.

1.  Know what you want

Fisher first focused on finding out his clients’ “personal and financial objectives.” This is a critical starting point for any negotiation. You need to figure out where you want to be at the end of the negotiation in order to design a strategy to get there.

And while this sounds simple, it can be extremely difficult. I recently led a panel that included the Vice President/Head of Supply Chain and Procurement for a large oil and gas company, and he said he spends 80 percent of his time with his internal stakeholders helping them figure out what they really want. The rest of his time he spends at the negotiation table attempting to satisfy them.

2.  Find out your counterpart’s wants and needs

The public company president told me that – after figuring out what his company wants – he almost always visits his potential targets and explores what they want. Since most of the companies he buys are privately owned, he said he always asks the principals why they are selling and what they want to do after a possible sale.

Do they want to cash out and retire? Or maybe they want stay involved in his company? The answer to these questions can completely change his strategy.

In one example he shared, the seller’s founder and CEO was in his 40s and was really feeling the stress of the recent economic downturn as it had forced him to take on significant debt. And most of the seller’s investors were family members, which added even more stress. The president told me he knew they would get the deal done as soon as he found this out.

3.  Negotiate from a position of leverage

Fisher emphasized the leverage that derives from finding multiple possible buyers for his clients’ companies. The more serious buyers he can find who will bid for his clients, the stronger his leverage.

Fisher also noted that – in case only one possible buyer expresses interest – you still need to convince that buyer that your seller has other strong alternatives. Those alternatives – which can also be powerful – could include not selling and growing their business.

The public company president articulated this slightly differently, indicating it’s critical to be patient and have a good walk away. I agree with both.

Published November 3, 2011 The Arizona Republic

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