Every entrepreneur should learn negotiation tactics for acquisitions. Negotiation is a process in which two or more parties with their own wants and interests debate an issue in order to reach an agreement. Negotiation skills are vital in business for both casual day-to-day interactions and formal transactions such as negotiating employment terms, service delivery terms, as well as other legal contracts such as company acquisitions.
Negotiation begins long before the two parties meet, as anyone with even the most basic sales training can tell you. Your position is already weak if you don’t understand where the other side is coming from, or even where you are coming from.
Remember that negotiating isn’t about getting everything you want; it’s about coming up with a solution that works for both parties. Do you have what it takes to complete a fair and attractive deal?
In this article, we’ll look at why negotiation skills are important for acquisitions, what to avoid, and how to use some of the best negotiating tactics to help you effectively negotiate your acquisition.
Remember that mastering the storytelling side and how you are positioning your business is critical when it comes to engaging and speeding up the process. This is done via your acquisition memorandum. This is super important to reach a successful acquisition. For a winning acquisition, memorandum template take a look at the one I recently covered (see it here) or unlock the acquisition memorandum template directly below.
Here is the content that we will cover in this post. Let’s get started.
- 1. What Are Negotiation Skills?
- 2. Why Are They Important?
- 3. The Negotiation Process
- 4. Benefits of Negotiation Skills
- 5. Effective Negotiation
- 6. How to approach a negotiation
- 7. Tactics For Successful Acquisition Negotiations
- 8. Prepare
- 9. Be direct
- 10. Give and take
- 11. Don’t compromise on ethics
- 12. Know what you want to achieve
- 13. Set the tone of the conversation
- 14. Build value
- 15. Stay positive
- 16. Conflicts of interest should be avoided.
- 17. A bit of give and take
- 18. Do not shy away from conflict
- 19. More than price
- 20. Common Negotiation Mistakes
- 21. Emotions
- 22. Accepting an offer too soon
- 23. Not paying attention
- 24. Lack of preparation
- 25. Attempting to “win”
- 26. Conclusion
What Are Negotiation Skills?
Negotiation skills are a collection of actions that allow two parties to effectively negotiate to get an agreed upon, desired result. A negotiating process often involves a conversation, offers and counteroffers, and, if successful, a final agreement.
Negotiation may be verbal, nonverbal, explicit, direct or implicit. Negotiation is an integral aspect of any kind of joint effort or dispute settlement.
Confidence building training and rigorous preparation can help negotiators enhance their abilities. In fact, just acknowledging your worries is an important first step in improving your negotiation skills.
Why Are They Important?
In today’s competitive economy, the skill to negotiate well is highly valued. Poor negotiating skills cost businesses a lot of money, but superior negotiation abilities may help them boost their profits.
Though negotiation results may occasionally end in a win-lose situation, effective negotiation is when everyone feels like they’ve gotten a good bargain.
A successful business leader uses negotiating skills to get what they want and increase their company’s market share. These skills include strong communication, persuasion, confident body language, and smart decision making.
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The Negotiation Process
When you negotiate, you must make judgments that will influence whether or not your acquisition succeeds. To get the best results, you must understand the stages of the negotiating process.
While many negotiations are straightforward, some will provide you with some of your most difficult challenges. Your ability to plan and prepare is critical to your success. Always enter negotiations with a defined set of strategies, messages, and tactics in place to guide you through the process from beginning to end.
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Benefits of Negotiation Skills
It’s difficult to overstate how important negotiating skills are during an acquisition. We want you to grasp this, so we’ll go through some effective negotiating strategies for a successful acquisition. But before we get started, let’s take a look at how effective negotiation abilities can help you.
- Negotiating may help you gain confidence because it allows you to see your worth and the skills and qualities you bring to the table
- Improves the end result – The primary goal of a negotiation is to get the greatest possible deal for you and your business
- Improve your listening skills: Active listening is an important life skill. Negotiating may help you improve your ability to listen and react thoughtfully to people
- While being able to negotiate is a crucial element of doing business and completing contracts, the advantages of being able to do so reach well beyond that
- Negotiation skills are helpful to both leaders and followers – Negotiation skills are advantageous to everyone, whether they are investors, founders, leaders or employees
An effective negotiation is an approach to solving problems. It’s a technique for reaching an agreement or a compromise while avoiding confrontation and dispute. In every debate, people naturally want the best possible outcome for their side.
Good negotiators are:
- Good communicators
- Good timekeepers
- Win-win oriented
- Aware of themselves and others around them
- Flexible with choices
- Honest and transparent
- Good planners
How to approach a negotiation
You should think about your strategy; there are three main approaches to negotiations: harsh, soft, and principled. Many experts believe that the latter is the better option:
- The hard method requires negotiating in a very competitive setting
- The soft method entails surrendering, in which one party makes a concerted effort to suit the interests of the other party while ignoring their own
- The goal of principled negotiation is to reach a long-term, win-win solution
Tactics For Successful Acquisition Negotiations
Before you start negotiating, learn as much as you can about the other side. The more you know about their motivation, where their business is in its industry, where it’s going, and what drives the opposite side of the table, the more power you’ll have to get better outcomes. You should also psychologically prepare yourself.
- At no time should you expose your emotions
- Don’t place yourself in a position where you’re above or below them
- Strive to be tough, businesslike, vigilant, and unrelenting in your approach
- You don’t owe them anything
- Maintain a calm and leisurely attitude
Clear negotiation is far more likely to result in a successful conclusion of a deal. It will make it easier for the parties to build trust and respect for one another.
In reality, this straightforward approach to a deal oozes the confidence you wish to project. In most cases, playing games during negotiations does not provide positive outcomes. It usually has the opposite effect. Games are self-sustaining and can spread to all parts of the negotiation. They complicate an already challenging situation.
Give and take
Although you should cushion offers to give yourself some leeway, bargaining may be exhausting. It may easily turn into a waste of time. Cushioning an offer or counteroffer may help, but the most critical component of getting a deal done is creating a deal that you can support.
When it comes to constructing a deal or a counteroffer, don’t be hesitant to push the boundaries. Unless you ask, you’ll never know if the other side will accept your suggestion.
Don’t compromise on ethics
It’s critical for all of us to keep aware of ethical pitfalls in negotiations and avoid absolving ourselves of responsibility for even slight breaches of our moral code.
The necessity of maintaining high ethical standards cannot be overstated. Demonstrating your commitment to good ethics will not only earn the opposing side’s confidence in discussions, but it will also help you develop long-term value for the deal.
Know what you want to achieve
You must maintain your focus on the core goals of your negotiation strategy. Don’t get too caught up with inside issues. Many a negotiator has failed because he or she grew fixated on winning a particular debate.
To attain ultimate achievement, you must maintain a single-minded focus on your principal objective.
Set the tone of the conversation
The terms of participation should be established at the start of the negotiation. For instance, everyone should agree to negotiate constructively and politely. This is beneficial for clarity, but it also enables you to return to the point if someone deviates from it.
You may remind someone, for example, that they agreed to be courteous if they got obtuse and started playing the tough guy.
This is crucial because it is what distinguishes good negotiators from masters. You will shine when you have a strong conviction in what you’re negotiating for. Master the art of expressing your thoughts and ideas in such a way that others recognize their worth.
Here’s how to do it well:
- Don’t only speak about what has to be done; do it. Discuss the ramifications of your solution, including how it will benefit the other party.
- Be direct when discussing a problem, make it very clear what your responsibilities are and discuss how to put them into practice.
Many negotiators underestimate themselves because they do not recognize the power they possess. You have more power than you believe in most negotiating situations. You must believe that the other side needs what you bring to the table as much as you want a successful negotiation.
Also, make sure your optimism shows throughout the conversation. Be aware of your voice tone and nonverbal body language while conversing with the other person.
Conflicts of interest should be avoided.
All parties involved in the transaction should be questioned about them. Conflicts should be carefully examined if they are discovered, and they should be disclosed.
The purpose is to show that any recognized conflict did not cause bias in the transaction process.
A bit of give and take
A mutually beneficial and respectful partnership should be your goal. Good negotiation is where you can make compromises that are little to you while offering something to the other side that is significant to them.
Your approach should generate goodwill, regardless of the differences in party objectives. Both sides are happy and willing to do business again after a successful negotiation.
Do not shy away from conflict
By their very nature, negotiations are contentious. It is critical that a seller understands this and does not try to avoid required confrontation. He or she should never, however, be the one to start it.
Without disparaging his opponent, the good negotiator signals that his will, will win. He should be assertive and commanding but in a good manner.
More than price
When it comes to negotiating an acquisition or merger, price is crucial, but it isn’t the only consideration. You should also think about:
- Are there any safeguards in place for the customer in the event of a problem?
- Will the present team members be kept on?
- What level of control will each side be given?
- The contract’s stipulations.
Keep an eye on what the other side wants to get out of the negotiation, as they may be willing to make other concessions to get there.
Knowing how to negotiate effectively is only one of the qualities of highly successful entrepreneurs. Check out this video I have created where I explain other skills you should develop. You’re sure to find it helpful.
Common Negotiation Mistakes
Emotional biases may make it difficult for negotiators to perform at their best. Our emotions, as well as those of our counterparts, may also, of course, supply us with useful information about how the negotiation is progressing.
Accepting an offer too soon
You’ve put out your terms of the agreement, and the other party is eager to strike a deal. While this may seem to be an exciting period, it is typically an indication of an approaching terrible transaction. Why? Because the other side was probably willing to go farther in the contract, but you didn’t ask.
Not paying attention
The most common negotiating blunder is one side failing to listen to the other. Despite the importance of emphasizing your ideas, it is equally critical to pay attention to the demands of the opposing side.
Lack of preparation
If you have strong beliefs about what you want to receive out of the deal, you may believe you’ve prepared well, but this is far from the case. Wise negotiators recognize the need of devoting sufficient time to thoroughly examine every part of the negotiation.
Attempting to “win”
Negotiation is about coming out of the discussion with the best possible outcome for your company, not about winning or losing. Individuals might get engrossed in delivering the greatest possible scenario and end up with nothing.
The tactics and tips in this article will help lead to success in negotiations. However, weak negotiating skills are likely to result in failure. Don’t put yourself in that position.
Negotiations may be difficult for both parties, and the buying and selling process can be emotional and demanding. The more information you gather throughout the due diligence phase, the more persuasive your offer will be.
By following the steps laid out above, you can ensure you are on the right track for a truly successful acquisition.
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