Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

October 16, 2018

Rules for Negotiation to Ensure That Money isn’t Left on the Table 

By Achim Neumann

All throughout the business world there are negotiations taking place each day, negotiations for better prices, better standards, better contracts and better valuations. In this regard the art of business hasn’t changed much since the days of trading 3 carrots for a head of lettuce. The winners of any negotiation are not those who necessarily get the best deal, but those who get what they set out for. There are some techniques that should always be used in a negotiation, and today we are going to look at some key rules which must be employed when sitting down at the negotiating table.

Clear Goals

Prior to even listening to what the other party has to say, or has to offer, one must first understand exactly what they are looking to get out of this conversation. There are 3 real keys to marking out what the goal should be;

  • Best Outcome
  • Bottom Line
  • Plan B

Once the best possible outcome and the worst possible positive outcome is understood, the details around getting either become far easier. Negotiations do not always go the way we that think they might, so having a plan B helps to avoid panic should things go awry.

What Angle Will Be Used?

A negotiation angle must be decided upon prior to the negotiations and used throughout the discourse until a solution has been reached. For example, if there is a negotiation for planning permission taking place between two local businesses, the business owner who is rejected the permission could do so because for a number of reasons, from legality to safety, environmental impacts or even public opinion. The key is to pick the strategy with the highest chance of success, and then using this as the key bargaining tool.

What wIll The Strategy Be?

Combined with the right angle for the leverage of the negotiation, it also helps to use a particular strategy when trying to get the best possible outcome. With regards to strategies, each negotiator has their own that they like to use, some may be heavy handed with a take it or leave it approach, others may try to win the other over with kindness and some  might mix things up entirely, in order to keep the other party guessing. Whichever strategy is adopted, it makes a great deal of sense to run with it throughout the entire negotiation process.

Giving Some Motivation

It is always a good idea to encourage a little motivation from the other party when conducting a negotiation, reminding them that they have something to win here as well. For example, let’s say that someone is trying to pitch their logistics management company to a potential client, and the client asks “why are your services better than the services which I am offered on a monthly basis?” A comment such as this brings out the motivation in the logistics firm trying to beat their competitors, and gives the potential client an extra edge.

Reluctance and Eagerness

In almost all negotiations, there is a party who is reluctant, and a party who is eager, and adopting the role of the reluctant party can be the strongest negotiation tool that there is. Playing this role forces the other party to be the eager party, a role which they are unlikely to want, as this is the party which more often than not, will give the most away to get the deal done. Playing the reluctant role is like playing possum, coming alive just when the negotiations begin to sound good.

Practice of these rules will ensure a far higher success rate in any form of negotiation.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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