Seven steps to negotiate deals
- Selling the company and the deal to the other side: the starting point in any negotiation is to present the company and the associated proposition to make it attractive to the other side. This will come from a strong understanding of what the other party to the deal – strong groundwork is vital.
- Listening and talking to the other side: it is essential to allow the other party time to explain how and why they are attracted to the deal. In addition, this provides an opportunity for the other side to signal other potential problem areas.
- Pitching the price and other aspects of the deal such as finance: in most international negotiations, negotiations are rarely simple. Issues such as finance and terms of trade, e.g. the length and time of credit, may be important aspects to clinching a deal. In such negotiations, it is also important to work out in advance what is the minimum price below which a deal cannot be done.
- Dealing with disagreements: it is quite possible that there will be disagreements both during and after the deal is concluded. There needs to be a mechanism for handling such issues – perhaps a binding contract, perhaps a third party intervention, perhaps arbitration with an agreed outside arbitrator. You will know that the deal has broken down irretrievably when such disagreements become public.
- Protecting vital interests: the best deal makers walk into negotiations with a very clear concept of vital interests. These are often unstated but never violated.
- Concluding the deal: one of the major skills in negotiation is to know how to conclude the deal such that the other party feels that they have achieved a fair outcome. In addition, the skilled negotiator knows when to stop and let the other party decide. Finally, the best negotiators know all about re-assuring the other party after the deal that they had concluded a competitive but fair deal.
- Knowing the bottom line in advance and not deviating from this: crucial in any successful negotiation. It is better to walk away than conclude a deal below the minimum acceptable level. If this is not done, then the deal often falls apart at a later stage and this becomes a problem for both parties to the deal.