In this photo illustration, a smartphone screen displays the Twitter logo and Elon Musk’s Twitter. … [+]
Negotiations are an important part of running a business. Hopefully both sides agree on the facts and work together to reach terms and compromises. The results in these cases should benefit everyone in a meaningful way. However, negotiations often break down due to one of the SINs (stubbornness, irrationality, narcissism). Egos, disagreements over basic facts, or disagreements over the reasons and benefits of closing a deal can all stall negotiations. As in the case of Elon Musk and Twitter, such conflicts can rob time, attention and resources from the organizations and individuals involved. Successful executives need to know when to negotiate, when to stand their ground, and when to walk away.
ideal scenario
When a deal is in the idea stage, it’s easy to visualize the path to success. The other side can clearly see your point of view and be tempted to believe that there is no disagreement about the facts, their implications, or their merits. Unfortunately, in the real world, such cases are rare. There will always be disagreements that need to be resolved. Compromises are possible, and if both parties approach negotiations with the same overarching goals, agreement can usually be reached. These are the situations that typically lead to successful corporate mergers and acquisitions, and are what every executive wants when they first come to the negotiating table.
deal with sin
However, if a deal is driven or hindered by stubbornness, irrationality, and narcissism (the three cardinal sins of doing business), negotiations can quickly fall apart. Management needs to recognize early when these situations arise and make clear the fact that an agreement is unlikely to be reached under those circumstances. If they need to close the deal anyway, they need to formulate a strategy that takes into account these character issues rather than just hoping they will go away or get better – they because it doesn’t.
In my own career, I dealt with this when TD Ameritrade wanted to buy a technology company. The company in question didn’t even bother to start negotiations. This was because the key person involved in the potential deal had developed a very negative reputation as an unreasonable person to deal with. As a result, instead of bringing this individual into the negotiations, we did business directly with representatives of the major private equity firms behind the technology companies. They agreed to sit with me on the condition that this other individual not attend. Difficult players can’t always be avoided, but leaders should always step back and look for alternative paths to success.
How important is it?
Closing a deal is sometimes very important, as is the case with TD Ameritrade and technology companies, and you can find a way through the hard times. Indeed, when the stakes are so high, walking away because someone is stubborn or acting out of their ego may not be an option. , you need to understand exactly why the deal is important and how much you are willing to compromise to make it happen. It’s important not to get involved in negotiations just for yourself and close deals on unfavorable terms.
when you leave
No matter how important a particular bargain feels, you can’t make a deal that ends up hurting you. Someone may put pressure on you in certain areas, such as finances, but if you know it will cost you three years from now, the deal isn’t worth pursuing. Always keep in mind what you want to get from If you can’t meet these goals at an acceptable cost, why would you want to do it? Always ask yourself if this is someone you would want to work with.
There is no perfect formula for closing a deal. Executives need to work on developing strong listening skills so that they can better distinguish between misunderstandings and critical impediments to trading. Knowing what the other person thinks, her SIN that could be involved, and knowing when to win the deal and when to walk away by having clear goals and understanding how much you are willing to give up. helps to understand.
Share your dealmaking experience with me on Twitter @CoachJoeMoglia.
