If the other party raises an unrealistic demand coupled with a sanction and a deadline, you will quickly be on the defensive. To avoid that scenario, you could place an unrealistic demand yourself early on and couple it with both sanctions and a tight deadline.
We recommend defining a «Rhythm of Negotiation (RON) before the negotiation. The RON defines what needs to happen when and provides a framework for your tactics.
If you want to close the deal in a year’s time, we recommend structuring the coming 12 months in the following way:
• 12 months till closing
• 9 months
• 6 months
• 3 months
• 1 month
As you can see, deadlock is an integral part of the process, and therefore, the RON. You are the one consciously steering negotiations into a dead end – avoid being pushed into this situation by the other side.
12 Monate bis Closing
Although negotiators do not feel much pressure to plan the negotiation at this point, this moment will decide whether you will win or lose this negotiation. This period gives you the opportunity to demonstrate to your team and the other side that you will be leading this negotiation.
1. In this phase, determine:
• Who will be Decision Maker, Commander und Negotiator in your team?
• Who will be the experts that will support your negotiating team?
• Who will be kept in the loop about this negotiation, and who will not?
• What are the demands (red, yellow, green) that you will have to anchor at this point already?
• What are the crucial pieces of information you need to obtain at this stage?
2. In the early phase, analyze the following:
• Decision Maker, Commander und Negotiator of the opposite side
• Experts of the opposite side
• Who could be your informant on the other side?
3. «Early involvement»
Approach the relevant business units in your negotiating partner’s organization early on to organize information calls or meetings. Demonstrate to them why early involvement is beneficial, be proactive and make sure you always take the first step. You can already place a «green» demand as decoy – this will put you in the lead position straight away.
4. Analyzing the opposite side
Start analyzing the other side early on to find out what is really important to them. You can inquire how far preparations have progressed on their side, if they need your support and if they need additional information from you.
5. Internal analysis
Many people underestimate the importance of the internal perspective. Your colleagues will know a lot about the other side, about their managers, their drivers, and what tactic could work to achieve your goals. Make sure you ask for their input.
6. Sense check
A sense-check with people who are not experts in the area you are negotiating is worth gold. It is best to ask people that have an analytical yet common sense approach. This could be former staff members or colleagues from another department.
9 Months till Closing
This phase should see regular meetings between the decision maker, the Commander, the Negotiator and Experts. The focus of these meetings is to compare notes on the latest information and potential blind spots.
6 Months till Closing
In this period, we recommend developing a timeline together with the other side.
• In a calendar, mark today and the day oft he closing.
• Mark all public holidays, weekends and annual leave of those that sit at the table negotiating.
• Use the remaining days on the calendar to schedule meetings and other important steps.
• Mark milestones on the calendar.
• Put the timeline into a PDF and send it to the other side – from now on this is «our jointly agreed» timeline.
3 Months till Closing
After you have agreed the timeline, all communications will refer to «us, our and we». Diverging interests will be banned from our vocabulary and there are only “common interests” and diversions from the timeline will be communicated saying “we will adjust the timeline” to avoid any blame games. A memorandum of understanding in the early phases has no legal weight but helps increase the moral and psychological commitment to stick to things that have been agreed.
An MoU should covert he following points:
• Names of the negotiating parties
• Expression of willingness to come to an agreement
• Summary of things that have been agreed already
• Summary of points that remain to be agreed.
• Description of transaction, if applicable
• For M&A: timeline for due diligence and valuations
• Power of attorney, legal deadlines, pre-conditions
• Release/destruction of documents
• Reasons for breaking off active negotiations
• Right to exclusive negotiations
1 Month till Closing
In this period, all parties involved need to have understood the value of reaching agreement and communicate it accordingly. Contested issues such as pricing or payment conditions should remain open in this phase as they will be resolved in the last phase of negotiations: the dead end.
Escalating negotiations to reach a dead end should be part of the RON. Avoid being surprised by a dead end – plan for it from day one.