Negotiation is something that people do almost every day in their lives and can take place virtually with little notice by the persons involved. However, negotiating in business is a formal process which can make or break a business venture. This is because deal making is what drives business and every player in the industry strives to get the best deal as possible. Any lapses in protecting one's interests in the negotiations can easily result in a raw deal which can in turn adversely affect either party of the negotiation (Harroch, 2016; Sanibel, 2009). Thus, it is crucial that the art of negotiation be taken as seriously to get the best deal for the business on whose behalf one is negotiating. This paper will describe how personal actions allowed me to succeed in a real-world negotiation scenario while referring my actions to literature relating to deal making /business negotiation.
The real-world case of negotiation that I participated involved selling a medium enterprise(in this report the name of the business shall be called Fliers Limited) to an investor from Porto Rico and another investor who had emigrated from China and settled in the United States two years before. The two investors sought to buy the business as a joint venture and they anticipated running the company as a partnership on acquiring it. Perhaps, they purchased the business with a view of expanding and diversifying its operations since the owners of the medium enterprise told me that they decided to sell the business following stiff competition from imports which had reduced the profit marginally for two years running. They had put up the business for sale and a year had elapsed with little possibility of finding a convincing buyer. Therefore, as a sales agent and chief negotiator, I had to contend with various issues to actualize an agreement for Fliers Limited to be sold.
The first thing I did after I was given the task was to schedule the date and place of the meeting. This may sound obvious for many people, but I understood as a negotiator that arranging for the meeting place. I had to prepare to ensure that both time and place were convenient to all of the participants. I selected a resort that was 10 kilometers from town, and fortunately, the parties were comfortable with the location. Based on my previous experience, I had the belief that selecting a place that I am accustomed to can provide me with the confidence required to make the right moves during the negotiation. The decision was also motivated by the understanding of some empirical literature which supports the decision. According to Brown and Baer (2011), choosing a location that you are familiar with in negotiations is critical to the success of the negotiations because familiarity offers one some form of 'home' feeling which gives the relevant party the confidence necessary to get the best deal of the negotiations. Hence, choosing a resort far away from town and a place familiar to me was one of the tactics I used before the meeting took place.
One issue I had to contend is that the suitors of Fliers Limited had had preliminary contact with the owners before and some modest negotiations took place. So I had to make adequate preparation for the negotiation after the parties confirmed the date and venue. According to Sanibel (2009), preparation is critical for one to achieve meaningful success in negotiations. It is not an emotional activity nor does it depend on luck or magic. Success in negotiation is achieved through preparation and hard work. Thus, in preparation for the meeting I had to research about the prospective buyers, their interests, culture and business standing through contacts provided by the owners of the business on whose behalf I was negotiating. This approach allowed me to get the details of the clients and also the details of earlier contacts with the organization.
The negotiation that resulted in the sale of Fliers Limited took place in two meetings. During the first meeting, my team arrived at the venue one hour before the time at which the negotiations were scheduled to start. Disappointingly, the team representing the buyers arrived one and half hours later. It was a challenging experience waiting for more than an hour at the resort. Some of my team members even suggested that we abandon the negotiations because they had participated in an earlier meeting which started late as well. This behavior made them believe that the suitors were not serious about making a serious offer. As a lead negotiator, I requested them to observe patience because it was worthwhile to do so. This decision was based on the experience I had and my homework about the would-be buyers. For instance, I learned that culture influences how people approach meetings and negotiations (Knight, 2015). So I had to inform my team to respect their strategy and how they approached the issue of negotiations as a whole.
The first meeting began after a few formal exchanges between my team and the buying team. Before the negotiations could proceed any further, I made a rather 'strange' enquiry from the prospective buyers. I call it strange because I asked them to frankly inform me whether they were still interested in buying Fliers Limited. This question was prompted by the fact that some contacts had been made before, but little progress had been made mainly due to the shilly-shallying attitude of the buyers. As such, I never wanted us to waste time on useless proceedings. In negotiations, it is important not take considerable time negotiating about a deal. Too much time is an enemy of deals (Harroch, 2016). I was prepared to walk out if there was a lack of clarity. Fortunately, the answer to this question was assuring.
The negotiations progressed for about 2 hours when the prospective buyers made an offer of $ 1 000, 000. In reply, I indicated that the asking price for the company is $ 1,500, 000 and justified the price using market data and the firm's performance in recent years. Although their offer was a reasonable starting point, I felt that little progress was being made in the negotiations because the other side could not answer too many questions my team members and I raised apart from making the offer. As a consequence, I requested for a break during which I advised my team that we needed negotiators who can respond to our concerns as well as make vital decisions about the subject matter of the negotiations. After the break, I raised the issue and requested for a postponement of the negations pending inclusion of critical decision-makers of the purchasing team. In short, I was playing hardball. They agreed and promised to meet us at an agreed future date. As the Young Entrepreneurs Council (2018) suggests, as a negotiator, it is essential that one asks more than what they need to know and also try to see things from the other side since such questions help the negotiator to think and evaluate the future value of the relationship more rather than focusing on just closing the deal.
The second meeting took place at the same venue. Since we had covered most of the ground, we went straight to the clarifications I sought in earlier meetings. This was done, and talks shifted to the offer. They began by increasing their offer to $ 1,100,000 and maintained that the amount was their maximum offer. After 2 hours, the buying team was stuck at $ 1,200, 000 and I maintained that we could not go below $1,400, 000. Further negotiations could not persuade either side to yield ground. Given the situation, we jointly agreed to conclude. We agreed we could not strike out a deal and it was, therefore, necessary to end the negotiations. Before ending the meeting, however, I requested that the prospective buyers' team is free to reach me if they change their position.
After ending the negotiations, I went back to the owners of Fliers Limited and informed them about the outcome. Seeing some disappointment about the news, I encouraged them that there are many other potential buyers already on the table. I retreated to my duties and forgot about the outcome of the negotiations. Surprisingly, a week later, I got I call from the client that they have agreed to purchase Fliers Limited at $1, 4000, 0000. The deal was quickly done and closed in the following day.
Overall, I believe I am an excellent negotiator. The ability to seek clarifications and learn about the nature of people one expects to negotiate with is crucial for any positive result to be realized in negotiations. I also believe that making the record straight on what you want can make one succeed in negotiations. Moreover, it is important not show that you are not desperate to make a deal.
Brown, G., & Baer, M. (2011). Location in negotiation: Is there a home field advantage? Organizational Behavior and Human Decision Processes, 114(2), 190-200. doi:10.1016/j.obhdp.2010.10.004
Harroch, R., & Allbusiness. (2016). 15 tactics for successful business negotiations. Forbes.
Knight, R. (2015). How to run a meeting of people from different cultures. Harvard Business Review.
Sanibel, M. (2009). The art of negotiating. Retrieved from https://www.entrepreneur.com/article/203168
Young Entrepreneur Council. (2018, July 13). 10 successful negotiation strategies that will help you seal any deal. Retrieved from https://www.allbusiness.com/10-successful-negotiation-strategies-seal-deal-107112-1.html
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