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:
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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.