The ability to conduct business negotiations is one of the key conditions for successful business. Some people simply have the gift of being naturally liked by others and being able to negotiate, but simultaneously, like any other skill, the ability to conduct business negotiations can be trained.
In every group of companies, there are probably some who are being talked about like this:
“What is he doing at all? He spends all day sitting in a restaurant and walking somewhere!” or “Why do some work and some don’t, he only knows how to talk.”
There are also quite a lot of employees who only know how to talk and create the appearance of work (and this is also a separate talent from nature), but the ability to communicate and maintain relationships with different people is extremely important for business.
While everyone is working in the office, this person is most likely negotiating a new job so that the company has orders, partners, and support.
Sometimes it may be unclear why this particular person has achieved success and has a huge fortune. But if you look at how they conduct negotiations, what kind of charisma, perseverance, intelligence, wisdom, then all the questions go away by themselves.
One way or another, people are engaged in business and the human factor is extremely large.
The nature of business negotiations
Business negotiations can take place on different issues and because of this have a different character:
- negotiations between sellers and marketers are one of their main negotiators for current activities, who are constantly trying to sell the company’s product, such negotiations are more friendly;
- corporate negotiations when agreeing on the terms of relationships, forming internal documents, approving the strategy of companies, distributing dividends, etc.;
- business negotiations when making M&A transactions;
- negotiations in order to resolve an existing conflict (corporate, financial, judicial, etc.) are the most stressful option.
Corporate business negotiations
When creating a joint business, it is very important to immediately provide for the conditions of cooperation and fix it in corporate documents. This can help avoid misunderstandings and conflicts in the future.
But there is a very fine line here, some neglect this point, since:
- they do not always want to raise issues of relations with a partner, who may be a close friend or relative, they are afraid to offend, to question trust;
- they believe that there is an extra bureaucracy that will interfere with work;
- there may already be tension and discussion of corporate documents may provoke a conflict.
Most business owners, especially if this is not their first project, or it is a large structure with an established corporate system, of course advocate regulated transparent relations with partners.
In order for the negotiations between the parties to be successful, effective, and not lead to conflict, it is better to have a moderator in the negotiations.
The moderator may be a representative of one of the parties, or a third party may be involved. The moderator accumulates the positions of the parties, forms materials, controls the timely distribution of materials, and coordinates meetings.
Negotiations will be held as efficiently as possible if they are well prepared.
People are now very overloaded with information and the higher a person is in terms of level, the more information he needs to process daily. Therefore, the information should be maximally adapted to easy perception.
If negotiations are held with the participation of high-level persons, then the material should be presented as briefly and accessible as possible, all details and details will be discussed by his subordinates and lawyers.
Business negotiations on the agreement of key terms of the contract
The time allocated by the shareholder/shareholders should be spent on agreeing on key conditions.
For the first stage of negotiations, draft agreements with a volume of no more than 2-3 pages are well perceived (some ask for abstracts with a volume of no more than 1 page, 14 font, so that you can read without glasses).
The coordination of all conditions briefly gives a person clarity, relieves tension, which makes it possible to continue to work effectively.
If we are talking about corporate negotiations, then usually among the key conditions will be:
- distribution of participation shares;
- investments of the parties in a joint business;
- appointment of management (CEO, board of directors);
- decision-making procedure (unanimous, simple/qualified majority);
- strategic business objective;
- profit distribution, etc.
After reaching the conditions on the main issues, lawyers prepare detailed drafts of corporate documents, which are subsequently reviewed and agreed upon by the parties.
In this form of business negotiations, the parties agree on internal documents, rules, how they will live and work. At the initial stages of business, negotiations are much easier and it is better to “agree on the shore” than to deal with a corporate conflict later.
Even in small businesses, it is sometimes even useful to have at least a brief agreement so that the parties understand each other correctly, what responsibilities and what business goals are. Not to mention medium and large businesses
The experience of participating in negotiations shows that it is easier for the parties if there is a disinterested moderator. He should be as friendly, neutral and professional as possible.
During negotiations, it is essential to avoid being guided by emotions.
If people do not often participate in corporate negotiations, then the moderator, with his calmness and dry discussion of even the most unpleasant questions, will relieve the general tension, he can ask questions that the second party is uncomfortable to ask or get a negative reaction to himself.
The moderator can prepare a ready-made draft agreement (terms), developed after a preliminary conversation with each party. It is often easier for participants to discuss the version developed by the moderator than to suggest something themselves.
All agreements and documents need to be drawn up while there is an opportunity and the parties are ready to do it, do not postpone it for later, since there may not be another good moment.
Negotiations when conducting M&A transactions
Before conducting business negotiations, when concluding an M& A transaction, you need to prepare as well as possible and study all the materials. There is no need to take up the negotiation time with questions that you can get answers to yourself.
It is advisable to send brief theses of your position before the negotiations, then the second party will have time to prepare and the negotiations will be more effective.
Dress code is currently quite free, the main thing is that the clothes are appropriate for the occasion, clean, neat, comfortable. Strict and official dress code when negotiating with government agencies higher in position.
For business negotiations, you do not need to take a lot of things with you (especially women), for example, heavy bags, umbrellas, hats, scarves, etc. It is better to be light so that you do not have to dress for a long time and detain other negotiators, all things can be left in the car.
You need to know all the rules of etiquette and follow them (be polite, do not interrupt, listen to the other side, etc.).
Business negotiations begin with a greeting and a small talk on an abstract topic. Since the pandemic, most negotiations begin with a brief discussion of COVID-19 issues, as everyone has something to say.
Then they proceed to discuss business issues, the parties state their positions, if there is a pre-prepared list of issues, the parties discuss them alternately.
During negotiations, it is important to present the position constructively, not to go into empty discussions. There is no need to hush up questions. It is necessary to discuss all the main theses to the end so that they can be further implemented in more detail.
Sometimes it happens that there is some complicated issue, but this situation will arise after some time and there is a desire to leave this point “and then we’ll see” or in legal language “all the issues that arise will be determined by the parties by an additional agreement to this Agreement,” but this should not be done in any case.
Not understanding all the stages at once, the parties risk going down the wrong path.
Following the negotiations, a summary of the meeting is compiled, which reflects the main agreements, issues and tasks for the parties.
Negotiations to resolve the existing conflict
If there is a conflict situation, it is good if the party enters into negotiations in the first place.
“It is the same in love as in war; a fortress that parleys is half taken.” Margarita Valois
In a conflict, the parties enter into negotiations, if there is something to discuss, there is a negotiating position and the forces of the parties are approximately equal.
If there is a strong advantage in someone’s side, then it will be extremely difficult to negotiate and it does not always make sense to enter into such negotiations.
In case of a difficult situation (inability to repay debts, non-fulfillment of contract terms, corporate conflict, etc.), negotiations need to be combined with official legal work.
Legal procedures, as a rule, have a long term, so there is no need to delay them, time passes very quickly, you need to start the countdown in a timely manner.
The entire system of legislation, despite the apparent workload, has an orderly logic.
The commission of official actions is a trigger for the start of negotiations, the parties begin to officially form their thoughts, their position, in this situation they have more chances to agree.
For example, before filing a claim to the court, you need to comply with the claim procedure, send a claim officially by mail with an inventory of the attachment, the response time for which is 30 days, that is, a month for reflection and negotiations.
We have not agreed – you can send lawsuits to the court, court sessions also last long enough.
Legal protection is like an army for a country, the stronger the weapons and advantageous positions, the more chances there will be peace.
But again, it is very important to feel the line, there are different cases that there are conceptual relations between the parties, and conceptual arguments can be the strongest.
If the second party has nothing to collect officially and if such a party is “passed over”, then it is easier for it to take offense and go to the formal plane, let the other party go to court, collect the debt, then declare bankruptcy, etc. There will be very few chances to recover anything. In this case, one of the parties, by excessive aggression, frees the other party from moral duty.
Sometimes the parties, without conducting negotiations or after unsuccessful negotiations, begin an active legal confrontation and after a while, realizing the costs and the long time of litigation, still make decisions to enter negotiations and reach some decisions.
Negotiating position in conflict situations
When negotiating in a conflict situation, it is necessary to form a negotiating position, namely:
- what are your strengths, why should they negotiate with you (if the position is very weak, then there is not much point in negotiating);
- what exactly do you want to offer the second party and why she can agree to this (you need to offer real options, perhaps think about the risks of the other side, take her side and assume that she could accept);
- offer a constructive compromise.
In a conflict, the parties to the negotiations may openly dislike each other, everyone may have mutual claims on past actions. It is necessary to abstract as much as possible from emotions and no matter what happens, do not lose your temper, because sometimes there can be real provocations.
The more professional and experienced the negotiators, the more seasoned and constructive they will be, since they have an understanding that this is a business.
The heads of the services of troubled assets of banks are very constructive, essentially, their main activity is the resolution of problems and conflicts, they understand how much time and effort is required for litigation and, as a rule, they are open to constructive dialogue.
In general, successful negotiations consist of 7 factors:
- Good preliminary preparation of the position and materials;
- Benevolence, professionalism and calmness in all cases;
- Clear statements of their position on all aspects of the project;
- The ability to listen to the second side;
- The skill to find a compromise on the spot and offer options for discussion;
- Personal charisma, sense of humor;
- More practice.
Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.
