How do you prepare for a deal negotiation with a potential partner or target?

Exactly! Before entering any negotiation, it's essential to have a clear understanding of your own goals and non-negotiables, as this will shape your strategy and decisions. Knowing what you want to achieve, whether it’s financial terms, strategic partnerships, or other objectives, keeps your focus sharp throughout the negotiation process. Equally important is understanding the objectives and priorities of the other party. By identifying where your goals align or diverge, you can better anticipate areas of agreement and potential conflict. A realistic assessment of your BATNA is also crucial, as it serves as a benchmark for when to walk away if the deal doesn’t meet your minimum requirements.

Before negotiations, having a scenario is considered crucial. In the negotiation scenario, we need to define our goals, what we are willing to give, and what we expect to receive. It's also important to specify our exit point from the negotiation, and if any unforeseen events occur, we are not willing to continue the negotiation in any way. Clarifying these aspects helps us avoid falling into the trap of the opponent's deceptive strategy

Do your homework. What is the top priority for your team? What pitch do you think would most appeal to the partner? Put yourself in their shoes.

"My experience in this field tells me that if a significant negotiation, such as establishing a broad and long-term inter-organizational collaboration, is to take place, we need a thorough and comprehensive analysis of the counterpart's position before entering negotiations. However, for less crucial negotiations, spending a considerable amount of time analyzing the competitor's situation might not seem logical, and a positive negotiation outcome can be achieved with a simple search and a brief summary in just a few lines."

It is always useful to have the market info handy and be well prepared. This may include examples of recent deals in the same sector, with their financials and results. Such market intelligence is not easy to get, at least in the Emerging European makers where we operate. Therefore, a reliable local market entry consultant can be essential in this process.

"As an example, I always try to put myself in the shoes of the counterpart, understand their motivations, and grasp what matters to them. Additionally, I make an effort to identify substitutes and alternatives for myself, determining whether there is another option for both parties to collaborate or not. This aspect is so crucial that it can almost define the negotiation strategy for both parties in most situations."

Setting up strategy and tactics is crucial for successful deal negotiation with a target company. In your strategy, you define the approach, objectives, desired outcomes, and key considerations such as valuation and terms. While in tactics, you outline specific actions to achieve these objectives, such as negotiation techniques, communication strategies, and contingency plans. By setting clear strategy and tactics, negotiators can align on goals, anticipate potential challenges, and maximize leverage during discussions. This preparation enhances negotiation effectiveness, improves decision-making under pressure, and increases the likelihood of reaching a favorable deal outcome.

"In teams, negotiations may involve various roles with different functions. For instance, I always play the role of a facilitator in negotiations. It may be necessary to have technical team members present to assist with technical issues. Someone may take on the role of a facilitator. It is not only important to identify the roles within our team but also crucial to recognize the roles of our negotiating partners."

"It might sound a bit funny, but our team usually does this in the company elevator just a few minutes before the meeting starts, and it has always been effective. It helps tasks and roles to settle in people's minds."