Top tips for negotiating business deals
At some point, most businesses will be in a position where some negotiation is necessary, but few employees are actually given any training for negotiating. With that in mind, law firm Brabners has provided some tips on how to negotiate business deals…
As a law firm, much of our role focuses on negotiating with third parties on behalf of our clients. Every negotiation is different, but our experience, over the years, has taught us that there are some key things to consider that can be applied to any negotiation.
- Information: Each party should learn as much as possible about the other so that they are better able to understand areas of leverage, easy gives and no-go areas.
- Leverage: The parties should evaluate the intrinsic factors of need, desire, competition and time pressures. For example, if a company’s business critical IT system fails, they will need a replacement system straight away. As they enter into a deal for the supply of such a system, their need will be high and they will be under considerable time pressure. Unless the system is easy and quick to procure from many competing suppliers, their leverage is less than someone who can wait several months to purchase a new system.
- Analysis: The parties should carefully consider what all of the issues are, aiming to have no unknowns. They should also consider outside impacts and understand what they can control and what they cannot. They should aim to isolate each issue specifically and reflect upon the relative importance of each.
- Rapport: It is key to establish a mutually beneficial working relationship with the other party. This can help to determine what type of negotiator each party is dealing with and whether or not they are likely to be cooperative.
- Expectations: It is important to set realistic expectations and then work to achieve them.
- Plan: The parties should have a flexible plan and strategy for the negotiation – flexible because unknowns and uncontrollables do arise. A plan enables a party to drive negotiations.
- Available outcomes and alternative options: If the negotiation stalls and the parties reach deadlock, it is important to effectively evaluate what the best alternative would be. You should always seek to understand what your own and what the other side’s worst-case scenario is. In the disposal of a company, the best alternative could be that another buyer immediately agrees to purchase the business at a better price. The worst alternative could be that a new buyer isn’t found and the company continues to operate. By contrast, the worst-case scenario might be that the management team walk, that the buyer takes the customers or staff or that the business runs out of funds. As well as weighing up your own best and worst alternatives, it is vital to be aware of the other side’s and also to consider whether or not they will be aware of your own. This enables pre-emption of the tactics the other side will employ in negotiation and allows an appropriate fall-back, bottom line position to be set.
Brabners is a leading commercial law firm with offices in Liverpool, Manchester and Preston.