Be a Better Negotiator

Being a great negotiator takes discipline. Below is a list of guidelines for success created from experience negotiating technology licensing agreements, and interacting with business development professionals.

Never fall in love with a deal
Whether we admit it or not, almost all decision making is done at an emotional level, with facts and data used to rationalize the decision. That may not be so bad when buying a car, but business deals need to be as emotionlessly calculated as humanly possible. You must be prepared to walk away. Falling in love with a deal can lead to what is known as the “winner’s curse.” Bidding high to win a deal leads to the winner overpaying. Let judgment win over emotion.

Don’t believe the numbers
They’re wrong. No matter how scientifically derived the financial projections are…they’re wrong. You need to know the potential of what you’re buying, but don’t give the numbers too much credit. It is impossible to predict the future.

Sell yourself and your company
You never know who the other party is also speaking with. You should communicate all the advantages you offer as a partner. Make them believe that doing this deal with you is best for them. This will help keep them at the table, improve your bargaining position, and make them feel good about the deal after it’s signed.

Build a relationship
Negotiations are the start of a partnership. They are not battles, or confrontations. They are a forum for creating mutually beneficial arrangements. Your interaction should reflect a good faith effort to build value. Approach your counterpart not as an adversary, but as a future partner.

Find a win/win.
Deals are about creating value. Each party is giving up something that the other party places greater value on. Find the deal that puts you in the best possible position and creates the most total value. The best negotiations leave both parties feeling good about how they came out of it.

Be prepared
Enter the negotiation knowing your position. Know what you want, what you can give up and what you can’t. Know at what point you’re prepared to walk away. And, just as important, know the same things about your counterparts! Think through their position to help you prepare for their reactions.

One exercise to help prepare for a negotiation is to fill out the worksheet below. It will help you frame your strategy.