The saying: “Act in haste, repent at leisure”, is well worth bearing in mind in any business negotiation, let alone in our personal dealings.
Careful and considered forethought and preparation can and do make a positive difference to outcomes in a commercial environment. Often decisions cannot easily be undone and remade, so it’s important to plan for the right outcome.
The following are, in my experience, the key aspects in a negotiation that are likely to have a direct bearing on successful outcomes. This is primarily in relation to the acquisition or the sale of businesses, but also can be applied to the procurement of services.
Know what you want to achieve
“That’s obvious”, you may say; “I want the best price for my business”. However, it goes much deeper than price. What about what you want to happen to your clients, staff colleagues, your premises, and above all, what happens to you, and your family?
Experience demonstrates that sellers and acquirers who have a clear set of requirements and priorities they can effectively (i.e. succinctly) articulate are likely to achieve their goals both in the immediate and longer term. Putting them on paper and seeking third party challenge to them will further improve the likelihood of a successful outcome.
- Know what the other party(ies) want to achieve
Again, this may seem an obvious point, but it’s important and worthwhile to ask what it is that they want to achieve, rather than make assumptions which may not be borne out by the facts or reality. By knowing what the objectives of a purchaser or a seller are, you will be able to both anticipate as well as to react more effectively in the ensuing negotiations.
- Know who the other party(ies) are and how they operate
It’s also important to know “how they tick”; what’s the culture, how do they do things? That will tell you how close to your own culture and ethos those who you are negotiating with are.
That will specially apply to their proposition. Would you be happy being restricted as opposed to independent, and is your investment philosophy similar to, or aligned with theirs?
- Choose the right advisers
Those of you who read my articles regularly will know I often emphasise this point. Having advisers that understand the detail of intermediary sales and acquisitions is key.
You need a lawyer who understands the nuances, an accountant who is familiar with the tax implications, and an adviser who can identify and differentiate between different types of buyers and sellers, and assist in the ensuing negotiations, are all key to achieving the optimum outcome.
- Know your strengths and limitations
I have left the most important element to last. It’s vital to think through what needs to be done, by whom and by when to achieve the desired outcomes.
While it’s easy to assume you, if you are the main shareholder or partner, will lead the negotiations, that may not be the best course of action in practice. You may be good at making the decisions, but not at executing them.
Also, your business still needs to function effectively during the negotiations so having others to delegate to is important.
Right first time
The sale or acquisition of a business – or procuring services – is not a rehearsal. The result matters, poor outcomes cannot easily be rectified, and usually there is no going back.
Spending the time that is needed at the outset to plan and then securing the resources and people needed, will significantly improve the likelihood of a successful outcome, in both the immediate term and over the ensuing years.
This article was originally published on Money Marketing