Negotiating in good faith: Be open and ‘all in’

Entering any negotiation is challenging. The stakes are high, and there’s a tendency to be skeptical.

The stakes are especially high when negotiating the sale of a business, but we’ve identified a few strategies to ensure all parties act fairly and suspend their cautiousness, even if you don’t land on a deal.

Keep reading to learn how to negotiate as if you’re on the front-page news, because when you’re buying or selling a business, you might be.

Be open and all in

The most important facet of good-faith negotiation is to be open, honest and candid. This includes sharing any “bad news” – which could be anything that halts the negotiation or exposes misalignment in either party’s expectations – up front.

A good-faith negotiator will share bad news right away so that all parties can respond accordingly, before they funnel their time and resources into the discussion.

This saves everyone from unnecessary pain and demonstrates integrity, which, in the business world, will serve you well further down the road.

Remain optimistic

Negotiation is all about ironing out the details and getting to an agreement. As we all know, a successful agreement isn’t always the result. However, if you can suspend any doubts when engaging with the other party you will be more inclined to find common ground and reach a decision.

Additionally, your own optimistic and open approach can help quell any cautiousness the other party might have brought to the negotiation. Be an active participant in setting up the negotiation for success.

After all, negotiators often serve unseen stakeholders whose influence comes from a place of genuine goodwill. Private equity firms serve pension funds and 401Ks, business owners serve employees, and individuals serve friends and families. Know that in most situations, everyone’s negotiating for the common good.

Find shared goals and approach negotiations with them in mind

When entering into a negotiation, be sure you understand the goals and initiatives the other party has set for themselves (in other words, what is very important to them). Then, analyze your own capabilities and find at least two that would directly help the other party achieve those goals.

This helps you find common ground during negotiations and will allow you to remain positive about the potential a successful deal can have in helping you achieve your core aspirations. Additionally, this allows you to truly focus on the other party’s success, knowing that if the other party wins, so do you.

If you’re “all in” on a deal, act as a true partner

Remember how every negotiation affects unseen stakeholders? Often, the individuals you engage with during negotiations will need to get approval from a larger group of representatives after reaching an agreement with you. In private equity, this can look like an investment committee or board.

They will often need your help to sell the deal to these stakeholders, so it’s crucial that you feel confident enough in the decision you’ve reached to support it in front of a larger audience. Negotiation is the first step towards partnership, and partnership requires you to be an advocate for the other party.

The takeaway:

Conducting good-faith negotiations is the first step to creating valuable partnerships, especially in the business world. The most important rule for these negotiations is to remain open, honest and candid, transforming a potentially stressful conversation into a collaborative pursuit rather than a zero-sum battle.

Shifting the focus from “winning” to creating shared value can pave the way for lasting partnerships.

To learn more, contact Sean Curley at (336) 217-9125 or sean.curley@charlesaris.com.