By Marty Latz
This is the second post in a four-part series regarding negotiations. You can read the first post here. Marty Latz will host a one-day seminar in Saskatoon on Thursday, March 26. This seminar qualifies for 6 CPD hours and will be live streamed. Click here for more details.
What can you do when someone not directly involved in the negotiation – a client’s spouse, silent partner, neighbor, outside advisor, or just a friend or colleague – weighs in and plays a counterproductive role?
And what if it’s happening to the other side, but threatening to mess up the whole negotiation?
Here are my recommendations.
Identify early on all possible parties that might have an impact on the negotiation and the decision-makers. Be overinclusive, too. It may not appear that a person’s opinion might matter. But their later thoughts could make the difference between a deal or no deal.
Then explore their interests and needs and evaluate which overlap or conflict with your or your client’s interests.
Let’s say your 40-year-old client built her business from the ground up and wants to sell and take a big equity interest and a formal role in the acquirer.
But her spouse has a more conservative approach to risk and money and wants her to cash out and spend more time with their family.
If you don’t identify and evaluate that spouse’s interests early on and address and prioritize them relative to your client’s interests and needs, you will almost certainly have a major headache down the road.
Also evaluate how, why and the extent of their influence. Then incorporate all of this into your strategic negotiation plan. Do this for those who may influence your side and your counterparts.
Most significant negotiations involve two major formal opportunities to involve external influencers: a) the strategic planning process, and b) the actual negotiation.
Of course, informal opportunities also exist, like a periodic call or email to bring them up-to-speed on the negotiations.
Consider bringing that external influencer inside your strategic tent, even if it’s only as part of an early brainstorming session.
Why? Because influencers’ relationships with decision-makers automatically give them an impact. Managing that impact and ensuring they play a productive role is crucial.
Don’t discount the upside benefit of their involvement, either. There’s often a very good reason they have influence, as they might be particularly creative, have helpful experience or expertise, etc.
Plus, influencers sometimes just want an opportunity to provide input. Or they might just want to be kept up-to-date on the deal’s progress. Involving them in some way can satisfy this interest and reduce the likelihood they might negatively impact it at the last minute.
Of course, it may be best to freeze them out if their involvement conflicts with your goals and interests.
I once consulted on the sale of an Arizona-based high tech company to a large New York-based private equity group. The Founder/CEO and his major investor controlled the company. Yet they brought a team of 10 to New York for the first meeting with the private equity group.
Only 4 of the 10 really played a role in the meeting. But it was a savvy move as the others, several of whom were minority investors, could have caused problems later if they didn’t like the deal.
One final note: it can be extremely difficult to do any of this if it’s an outside party influencing your counterpart. You may have little control or even contact with them. However, consider raising their role with your counterpart if their interests conflict with your counterparts.
Finally, one reason many influencers cause problems results from their weighing in without fully appreciating the overall strategy or context of the negotiation. For instance, they might suggest a deal is not worthwhile without understanding that your leverage is extremely weak given your really bad alternative/Plan B.
Or they might tell your client the lawsuit settlement seems unreasonable, being unaware that a jury in a comparable case just decided against a similarly situated defendant.
What can you do here, assuming they have significant influence on the decision-maker? Educate them. Share with them a more complete strategic picture, which you’ve hopefully documented in a written strategic negotiation plan that includes the major strategic elements of the process.
Latz’s Lesson: Outside influencers can make or break a negotiation. Take control of their influence by incorporating them into your strategic process.