As we slowly start to recover from the pandemic, we’re seeing business activity pick up, including a number of partnerships, mergers and acquisitions. I’ve been somewhat surprised by the amount of SPACs (Special Purpose Acquisition Company) that in turn are driving more companies to consider acquisition offers as a vehicle to a public stock exchange listing. All of this activity has heightened the need for business leaders to hone negotiation skills in order to achieve successful outcomes that deliver value for all stakeholders.
When conducting business negotiations, I’ve always believed that the best deal is a fair one that is advantageous to both parties. In its most simple form, this means that both sides need to be reasonable and willing to compromise to ensure the deal works for each party. When preparing for such a negotiation, there are three criteria that must be clearly understood:
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- The optimal deal that provides the most desired outcome, while still being reasonable for the other side;
- The parameters that you’re willing to compromise on or give up in order to reach a deal;
- The point at which you will walk away from the deal and the associated “BATNA” – best alternative to negotiated agreement.
The concept of both sides achieving an acceptable outcome is also called a “Win-Win” and there have been many articles and books that have provided guidance in this area. Here is a great article that outlines an approach to successful win-win negotiations. It suggests that the starting point is to separate people from the problem, then focus on interests, seek options that provide mutual gain, use objective criteria to evaluate the options, and to know your BATNA. In addition to a concise description of each of these topic, the article also provides some useful tips.
Having a BATNA is key to ensuring you can walk away from a negotiation that simply isn’t going to work. This article, from several years ago, provides a detailed explanation of BATNAs as well as a structured approach to determining your BATNA.
As the business environment ramps back up, so will your need to engage in various negotiations. Staying true to your principles, and remaining fair and reasonable, will enhance the likelihood of achieving successful outcomes.