Entrepreneurs As Successful Negotiators
March 14th 2007 09:48
Successful negotiations are more than getting a contract signed. A contract is just the product, not the driver. Good negotiators are good because they produce a meeting of minds. They define how each party will contribute value and how contributions will be measured. They anticipate problems and agree on solutions, establish rapport and build trust.
As an entrepreneur, your job as negotiator is to open things up, to envision and enable. Leave it to the lawyers to close loopholes. This means giving yourself and your prospective partner ample room for discussion and accepting constraints reluctantly, whether structured, financial or political.
Alliance negotiators are not for the fainthearted. A good negotiator strengthens the partnership ; a poor one can poison the deal. Good or bad, the negotiator sets the tone for the relationship to come. The most skilled dealmakers do it by being systematic, structured and disciplined. Here's how :
* Know the value of your assets
Know what your assets are worth before you begin. Think you have strong capabilities in marketing and distribution? How much are they worth to a partner? Have a promising new patent or other intellectual property? What is it's revenue potential? Questions like these go to the heart of a deal. Benchmark assets against the market. Look for internal and external precedents, the internet is a very rich source of information. if you still are not sure, get outside counsel.
* Bring experts into negotiations
If you are the negotiator, that is a big role. You will need the assistance of a host of experts. When negotiations begin, ask colleagues with specific technical expertise, including research and development, supply chain and marketing, to talk with their counterparts in the other organization. The job of these experts is to assess the prospect's capabilities and to help determine how best to integrate operations. When you begin discussing specific terms, bring in legal and financial counsel. Finally, as the agreement is codified, encourage shareholders and possibly outside advisors who are familiar with similar deals to weigh in.
* Agree on the process
Discuss with your potential partner the kind of process you want to follow. Explain the merits of shared vision and goals. Stress the importance of common criteria for measuring success. Consider such contingencies before consummating the deal, even if it puts a chill on the courtship
* Transition quickly.
Once a deal is signed and announced, use the momentum of a successfully completed negotiation to spur alliance managers into action. Long delays often occur before a new alliance is up and running because the right people were not available. Plan ahead.
As an entrepreneur, your job as negotiator is to open things up, to envision and enable. Leave it to the lawyers to close loopholes. This means giving yourself and your prospective partner ample room for discussion and accepting constraints reluctantly, whether structured, financial or political.
Alliance negotiators are not for the fainthearted. A good negotiator strengthens the partnership ; a poor one can poison the deal. Good or bad, the negotiator sets the tone for the relationship to come. The most skilled dealmakers do it by being systematic, structured and disciplined. Here's how :
* Know the value of your assets
Know what your assets are worth before you begin. Think you have strong capabilities in marketing and distribution? How much are they worth to a partner? Have a promising new patent or other intellectual property? What is it's revenue potential? Questions like these go to the heart of a deal. Benchmark assets against the market. Look for internal and external precedents, the internet is a very rich source of information. if you still are not sure, get outside counsel.
* Bring experts into negotiations
If you are the negotiator, that is a big role. You will need the assistance of a host of experts. When negotiations begin, ask colleagues with specific technical expertise, including research and development, supply chain and marketing, to talk with their counterparts in the other organization. The job of these experts is to assess the prospect's capabilities and to help determine how best to integrate operations. When you begin discussing specific terms, bring in legal and financial counsel. Finally, as the agreement is codified, encourage shareholders and possibly outside advisors who are familiar with similar deals to weigh in.
* Agree on the process
Discuss with your potential partner the kind of process you want to follow. Explain the merits of shared vision and goals. Stress the importance of common criteria for measuring success. Consider such contingencies before consummating the deal, even if it puts a chill on the courtship
* Transition quickly.
Once a deal is signed and announced, use the momentum of a successfully completed negotiation to spur alliance managers into action. Long delays often occur before a new alliance is up and running because the right people were not available. Plan ahead.
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