A client of mine was recently on the verge of acquiring a small business that perfectly fit its growth strategy. The acquisition was supposed to be straightforward—until the seller’s lawyer, let’s call him Mr. Fine Print, began dissecting every line in the contract, from minor equipment warranties to the non-compete clause. Before long, my client felt they were buying a headache instead of an opportunity and ultimately decided to walk away.
Unfortunately, negotiations like these are all too common, where unrealistic demands and a lack of understanding turn promising deals into missed opportunities. Here are some guiding principles to help bring purpose into the negotiating process.
Start with Empathy
Empathy is an underrated yet powerful tool in negotiation. When you take the time to understand the motivations and concerns of the other party, empathy can often help uncover solutions that go beyond conflict, fostering mutual respect and support. Empathy does not mean conceding; it means listening with genuine curiosity and trying to understand motivations. By tuning into the other party’s perspective, it is possible to turn tense discussions into creative solutions.
Build Toward a Win-Win Outcome
In well-balanced negotiations, both parties walk away with a sense of achievement, even if the outcome isn’t a perfect 50-50 split. Identifying and communicating your priorities and key interests early on in the process helps create a framework for reaching a win-win outcome.
Avoid Nitpicking
Details matter, but there is a difference between diligence and nitpicking. Keeping contracts clear and focused on essentials, rather than taking a defensive stance, can prevent negotiations from stalling and eroding goodwill. Small businesses thrive on trust and efficient time management, and getting bogged down in minor details wastes both. Keeping the big picture in mind can help prioritize essential terms and maintain goodwill, often leading to positive negotiation outcomes.
Embrace Reasonableness
For small businesses, reputation is built on fairness and consistency. Unreasonable demands can stall progress and increase the risk of disputes, while focusing on realistic goals helps prevent roadblocks and build trust. A fair, practical approach can lead to stronger, more resilient relationship, with disagreements less likely to escalate into litigation.
Summary
- Start with Empathy: Approach negotiations by understanding the other party’s priorities and concerns, fostering trust and mutual respect.
- Build Toward a Win-Win Outcome: Focus on terms that align with both parties’ core interests for long-term success.
- Avoid Nitpicking: Focus on essential terms to keep negotiations efficient and constructive.
- Embrace Reasonableness: Set realistic expectations with clear roles and timelines.
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