7 Deadly Sins of Merger and Acquisition Negotiations
These seven deal-killers will surely stop any deal in its tracks. Learn how to recognize and combat them.
The saying is true. The devil is often in the details.
In the business world, mergers and acquisitions generally come about either out of necessity or in pursuit of a specific goal. While at the onset, these opportunities can appear exciting, the reality is that they are fraught with intense negotiations, and often they feel more like a game of chess. Once mental warfare sets in, navigating the intersection where personalities, power plays, and business nuances collide can become all-consuming.
For those who have not been through an experience like this before, getting caught up in subterfuge can become a distraction at best. It's important to remember that, above all else, keeping your goals at the heart of each move you make during these negotiations is paramount to maintaining your edge and negotiating effectively.
For those who have been through a merger or acquisition process, it is safe to say you've learned a thing or two. While negotiating each deal comes with its unique set of parameters, seven common deal killers tend to creep in at various stages of the conversation. While human nature may be unavoidable, experience reveals that it can be tamed.
Here are the seven sins of merger and acquisition negotiations:
Nothing will kill a deal faster than ego. Period. While it is rare to encounter a negotiation where ego doesn't rear its ugly head, know when to take a step back to either simmer your ego down or allow your opponent to take a breather. Entrepreneurs often enjoy the art of the deal, but it can quickly turn into a duel to the death if a party in the negotiation feels their pride has been infringed upon.
Remember that when parties enter into this type of conversation, the entities built or the proprietary approaches developed are often the life's work of one or more people at the table. So, naturally, when discussing financials, terms of the deal, or a change in leadership, it can be easy to insult someone's ego.
Mergers and acquisitions rarely make it to the finish line when the deal feels too one-sided. If both parties are unwilling to give up something, the deal can become lost in an endless power struggle. Both parties should know what their non-negotiables are before entering into negotiations. By going into a negotiation knowing what you are — and are not — willing to compromise on makes dollars and sense. It also serves as a guardrail for the conversations which can become heated and emotional. Having clarity of non-negotiables makes all the difference in being able to recognize swiftly when a deal has come to an impasse.
Anger only adds fuel to the fire. When negotiations become heated (and even the best of them do), it is best to take some space to become centered again before responding. While this may seem passive, savvy negotiators know that responding with a clear head and a well-thought-out rebuttal is the fastest way to resolve the current sticking point.
An entrepreneur can smell envy a mile away. If you are entering a negotiation and envy or jealousy is a driving force, be prepared for a negotiation that will end nowhere. Envy does not breed success as the focus is too much on what the other party has. Focusing on your assets and value in a successful negotiation allows you to stand firm in your negotiating position. Allowing envy to lead you is giving away your power.
Desire can be like a runaway driver of the deal. There is a difference between knowing what your objective is and maneuvering around your non-negotiables to get to it and throwing all common sense to the wind in hasty pursuit of making the deal happen. Step back and consider what you really want — is this negotiation focused on financial gain or dominating market share? Is this deal about preserving a legacy or attaining a different quality of life? What is your primary motivating factor? Keep your motivating factor top of mind with every move you make, and remember that doing a deal to "make the deal" is for amateurs, not disruptors or innovators.
It is often said that "pigs get fat, hogs get slaughtered." There are two important factors to consider regarding the bottom line — the financials and the terms. Generally, getting both of those to be exactly what each side would like them to be is a long shot. While it's not impossible to get there, it is highly unlikely. Thus, you must know which of those two points you would be willing to bend a bit more on if the negotiations progress and you find yourself in a position where to move forward, either the monetary means or the terms of the deal need to give a bit.
Negotiation is an active practice. There is a difference between creating some space before responding to a heated point in the conversation and going missing for an extended period. Respectfulness is vital to ensuring that all parties feel valued, especially during detailed discussions about finances and a change in ownership or leadership. Everyone's time is valuable, and everyone with a seat at the table should actively support the process of pursuing the common goal.
As with all things in life, every beginning comes with a future end. No matter what stage you are at in your business, being prepared for the evolution of it is a necessary part of the journey. After all, life is not a dress rehearsal, so approaching each day you invest in yourself and others as an entrepreneur and business owner counts.
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