Deals are always being done!
We all do hundreds of deals in our lifetime, many on a day to day basis, sometimes without realising it.
Whether you are trying to get your children to finish their dinner (“Finish your dinner then you can have some ice cream.”), or getting your suppliers to enter into new terms of business with you (“I can only commit for a longer term if the price is right.”), knowing what to say and when to say it is very important for any successful negotiation.
We’ve been asked to “do a deal” in many different scenarios. Whether we’re negotiating for our clients a settlement in a litigation matter, a new business contract or terms of a shareholders’ agreement, there are many things that have stood us and our clients in good stead when negotiating. We would like to share with you some points we have found helpful, and hope you will too. These tips can be used in most negotiations. (Disclaimer: Please do not try these at home with your partner! *tongue firmly in cheek*)
This article is slightly longer than our usual, which means you can have some biscuits with that cup of tea you were planning to have while reading this! So kick back and enjoy over the next 5 minutes.
What is the end result you are seeking?
A very important question you need to ask yourself at the outset. Often when we ask our clients this question, it never ceases to amaze us how often the end result sought is not entirely clear to our client.
Once you have this idea in your mind, you will then have a clearer vision as to what steps you need to take next in order to achieve that.
Who are you negotiating with?
Often, especially in SME’s, we have found that people do business with people. While business can be done solely on a product, personalities are often key in determining whether or not negotiations are going to be successful.
We’ll just quickly bore you with a story. In one case, we managed to successfully negotiate the removal of a shareholder just by establishing with our client the nature of the person we were going to negotiate with. By better understanding what we were likely to encounter in negotiations, we were better placed to understand what was likely to come our way and be prepared for it.
Don’t take things personally!
Following on from the above point, often negotiations can fail because one or both of the parties get side-tracked by personal issues. This is often seen in a business partnership that was once successful has ended acrimoniously. It’s essential in cases where emotion can run high for one or either party, to focus on reaching an agreement that respects the needs of both parties. If someone is being difficult or rude, try not to take it personally and focus on the solution.
Do your research
“Fail to prepare, prepare to fail” – it is as simple as that. If you go into an unknown part of the country in your car, you will often take your sat-nav. Why? Because it knows the area and can better navigate you to your destination as quickly and as pain-free as possible, as it has the roads already ‘researched’.
By researching who you’re negotiating with, not only does it give you a better idea of what you’re dealing with, but it also shows a mutual respect to the person or organisation you are negotiating with. After all, you’re trying to do a deal with them aren’t you?
Where does the land lie?
Always have a good idea as to what it is you are able to negotiate with. While you may have an idea as to what you think it is worth, it would help you more if you had a better idea of what it is worth to the other side!
Stop! Story time…Our director once conducted a mediation where he was trying to get the other side to see that by sticking to their guns and continuing to trial on a property dispute was not in the interests of either party. Even more so in this case, because even if the other side ‘won’, they would be seeking to enforce their costs against a company that would be unable to pay the judgment debt and most likely go into liquidation. So our director suggested a property purchase which would end the dispute and ensured the interests of both parties was protected. Unfortunately, our director’s advice fell on deaf ears and in the end, although the other side ‘won’ at trial, they spent thousands of pounds on costs and never recovered a penny.
This story just illustrates that the other party simply would not see beyond their own position and failed to recognise where they stood in the grand scheme.
Incentivise!
That’s right! There is no point in doing a deal if there is only one person benefitting. While from a solicitor’s point of view we are there to minimise risk for our clients, it has to be balanced against the business that is going to be done between the parties. Because once the solicitors are out of the picture, what is left is the relationship between the parties. You don’t want to ruin it by constantly wanting your way, only for the relationship to be heading for a breakdown before it has even begun!
What is negotiable?
Have a clear idea in your mind as to what is not as important for you in negotiations. They may be ideals, but be willing to compromise on these.
What is not so negotiable?
We’ve deliberately used the term “not so negotiable”, because from experience, even “non-negotiable” terms can and have been negotiated. In reality, the term “highly desirable” is more apt.
Knowing when to say what you want is essential, as is not being afraid to ask for what you want!
Listen!
God gave us two ears and one mouth for a reason. We should listen more than we talk. By listening, you might learn something you do not already know, as opposed to saying what you already know.
Always be willing to walk away
After all the hard work, you’ve finally got to the table to finally sign that deal you’ve been working so hard on. You’ve already planned what you’re going to do with the money. The day comes, and last minute they’ve had a change of mind and would like to re-negotiate a few terms. This can, and has happened. If it does, don’t worry! It is not personal, it’s strictly business.
It’s tempting to complete the deal there and then (after all, you’ve worked so hard at it right?) We would advise that don’t focus so much on seeing a positive outcome that you have to do a deal come what may. Be prepared to walk away!
Right, that’s it from us. A bit more comprehensive than usual we appreciate. But we like to think you will have enjoyed reading this and found it useful. We could have gone on with several more tips, but you’ve probably ran out of tea and biscuits!
These tips are general and are not to be construed as giving specific legal advice. As always, the advice given is dependent on the individual facts of a case. If you would like some assistance in negotiating for you or your business, then please get in touch. We are more than happy to help.
