First, let me say that I've been a long time fan of Getting to Yes and Getting Past No, two books that came out of the Harvard Negotiation Project. They espouse a philosophy called Principled Negotiation which attempts to get both sides to negotiate interests instead of positions. If you haven't read them, I'd suggest picking them up. They're short, quite approachable, and if you're not already using their techniques in your negotiations, you should be.
I started my career as a somewhat weak negotiator. Like many, I was very idealistic and believed that ultimately everyone negotiated for a win-win. I always wanted to be fair and to give the benefit of the doubt to the other side. And too often, I gave away too much to get the deal done. This created resentment on my part and I found myself finding ways to terminate these agreements by looking for better partners. You see, not only had I made a mistake in my weak negotiations, the other side made mistakes by ultimately taking advantage of my weaknesses.
How did they lose out? In business, the vast majority of negotiations are intended to create lasting relationships. If a negotiation concludes and one side is unhappy, there's a good chance problems will arise from the bitterness and resentment caused by the negotiations.
For me, I think I hit a wall when I began my first negotiations with Israelis. I don't really mean to stereotype, but I think most people will agree that Israelis are tough negotiators. My first deals were with startup companies who wanted to license our technologies. Later, I negotiated with larger companies to represent our products. One of my companies was acquired by an Israeli company and ultimately, I bought that company back. I learned a lot negotiating with them.
At first, it just seemed like they constantly pushed to get more. If anyone was happy, negotiations had to continue. I left meeting after meeting frustrated. Every deal was a lose-lose. If both parties weren't unhappy, clearly one had taken advantage, so both sides had to negotiate until they were equally unhappy. Only then did you have a good deal. Several times, I walked out of meetings convinced negotiations were over. This seemed to make my adversaries happy, or appropriately unhappy, and usually we came to agreement shortly thereafter. It seemed like a miserable way to start off a new business partnership.
Worse, they seemed to enjoy these negotiations while I just tried to survive them.
Or maybe I just didn't understand what was going on. I didn't know how to stand back from the negotiation and look at it objectively. I didn't know how to separate negotiating positions from real interests. I didn't know how to step into the other side's shoes and really look at the situation. And I didn't know how to deal with people who used position, power, and advantage to beat down the other party.
In reality, it wasn't the Israelis, it was me.
Fortunately, after one particularly difficult negotiation, my adversary and new partner decided to counsel me. Completely independently of Getting to Yes, he taught me the techniques and even role-played situations to help me develop my skills. And I got much better.
Over the years, I also came to realize that most of us think that each deal is critically important. Too often we'll do whatever it takes to make it happen. At some point, we begin to focus too much on making the deal, not on why we're negotiating in the first place. I learned that very few deals are critically important and that it's okay to walk away when you realize that either the other side isn't listening or isn't sensitive to your interests, or that you just don't have enough common interests to benefit both sides. Having the ability to walk away is a very powerful weapon in your arsenal. Ultimately, it makes you step back and look at the negotiation objectively, look at the interests of both sides, look at the people involved and what's important to them, and be a better negotiator.
So what about the recent acquisition?
We got lucky. From the outset, both sides explained exactly what they wanted to get out of the deal. With agreement on the highest level objectives, it came down to deal points which were all interest-based. Personalities did not get in the way. There were disagreements, but with each one, we looked at alternative solutions, the pros and cons of each, and how they affected the goals of each party. Sometimes there was impasse. We'd sleep on it and usually, if there was no reasonable compromise found, we'd agree to a tit-for-tat - an exchange to make up for what one party was sacrificing.
I must admit though that towards the end, contract fatigue set in. I've seen this happen a lot. After weeks of negotiations, particularly if there are delays, frequently caused by the advising attorneys, people just want to get it over with. This is a dangerous time as too often one side will just walk away exhausted.
It's a time when both parties need to be conscious of the risks to the deal and may need to bring their attorneys into line by assessing real risks in the contract language. Ultimately, a contract comes down to trust between the parties. Remember, attorneys are your advisors. They're not negotiating the deal for you. You need to manage them and make them understand your needs in closing a deal.
In our case, both attorneys recognized the importance of the timing of the deal and they too focused on the parties' interests. This time we survived contract fatigue.
All-in-all, it took about six weeks to finalize and sign the purchase agreement. Both sides are excited about moving forward. Both sides feel they got everything they needed out of the deal and both sides came away with a better understanding of the goals of the other.
I see promising outcomes for both.