Many people approach a business negotiation like a bar fight. They figure it's like this: If they're strong, fast, cop the right attitude and have a few good moves, there's nothing they can't handle. To them, it's only about that verbal game we call negotiation.
But imagine yourself a world-class haggler in the following scenarios: You've negotiated a superb deal, only to find out the other side never intended to honor it, or the dealmakers are flakes who simply can't cut it. Suppose you've dickered a difficult merchant half to death then learned that a nearby competitor would have easily beaten their best price by 15 percent. Or you've bargained for an item you later find you don't need or want. As my father used to sarcastically say about distress sales, "Why not buy two? Throw them both out!"
Volumes have been written about negotiation. Yet few seem to realize it's just one step in a larger process called dealmaking. In fact, I think it's the fifth step in a six-step process that goes something like this:
Step 1: Step back and look at the big picture. Set goals by asking yourself why you really want to make this particular deal. Research the marketplace to get an idea of what your deal's really worth. Be creative by exploring all your alternatives. That way you'll know you're in the right deal.
Step 2: Get help. Put your team together. Depending on your situation, you may need an attorney, an appraiser, a banker, an agent, a broker, an accountant or some other professional. If a pro isn't in your budget, try to educate yourself through books, magazines, the Internet or discussions with businesspeople in the area. At the very least, use friends as a sounding board; they're the ones who know you best.
Step 3: Smoke out the people or companies on the other side of the table. Do your due diligence. Look at financial records. Inspect the premises. See what's on the public record. Even the best and brightest can be blindsided. Consider Mike Ovitz's recent deal with Livent. He put millions into the company without realizing its founders were cooking the books. If it happened to him, it could happen to you.
Step 4: Identify and plan to minimize your risks. Maybe you need some kind of insurance. Or your formal contract can make the other side responsible for certain risks. Don't forget plain old street smarts: Resolve to get a lot of money upfront. Find a deep pocket to put on the hook. Aim to put an escape clause in your contract. Insist on control so you can keep your deal on track.
Step 5: Now that you're prepared, you can use all those nifty little negotiating tricks you've perfected. Feign disinterest, flinch, stonewall, toss out a low-ball counteroffer, bait them with open-ended questions, pound the table if you like. With all your priorities and concerns in mind, this is where you give and take to customize the deal to your satisfaction.
Step 6: Don't let your guard down. You're not done until you sign a written contract that accurately reflects the deal you made. For it is written that the palest ink will last 1,000 years beyond the best memory.
Superior dealmaking requires more than excellent negotiating skills. It's also about introspection, analysis, creativity, team building, investigation and planning.
So the next time you're itching to just jump in and duke it out, mano a mano, pull out this checklist first. Don't get ambushed from the front. You may spend more time on certain steps, you may combine them, you may not even do them in order. But if you ignore or miss a step, you're asking for it. Don't give me a reason to say, "I told you so."
A speaker and attorney in Los Angeles, Marc Diener is the author of Deal Power: 6 Foolproof Steps to Making Deals of Any Size (Owl Books/Henry Holt). You can reach him at MarcDiener@aol.com.