M&A Negotiations: Do it like a Golden Eagle (Part 2)

I have mentioned the role of panoramic view and prey focus together in the previous post and at this moment I deal with opportunity orientation regarding M&A negotiations.

The Opportunity Orientation of the M&A Negotiations

Opportunity orientation is one of the traits of the golden eagle entrepreneurs in which the entrepreneur not only seeks for opportunities, but also creates opportunities and avoids possible pitfalls.

During M&A negotiations it is up to the team to create opportunities. As mentioned before, one of the mistakes of M&A negotiators I have experienced is that they mostly mistake it for street bargain shopping. Moreover, the M&A negotiation is an information game. Thus, the information you collect through panoramic view leads you to create and explore opportunities during negotiations. The key to success in opportunity recognition and creation you have to implement set of good strategies for your M&A process:

Keep Calm and Stay Passive

Keeping yourself calm during negotiations is the key to opportunity recognition. If you start talking too much instead of listening, you will definitely lose some vital information that are your potential opportunities. In one of the negotiation sessions that I was involved for an M&A our team encompassing the CEO, the technical expert, and me visited the factory of the seller entrepreneur. In that negotiation I have faced an important issue: talking too much from our team. When we were back to the office, I have noticed that our team totally missed one major point of the negotiation that were told by the CEO of the seller company regarding some percentage of their material which later became a critical issue. I was the only one in our team that heard and noted that information just because I was calm and not excited and subjective. I was only hearing when seller was giving the details while the rest of the team were excited about the size of the factory, modern machineries, etc. In fact we were at the factory to collect as much information as we can, but getting excited by our team was leading us to a big misinterpretation.

Therefore, you should always try to control yourself and stay calm during any negotiation process and hence build and explore opportunities. The issue that I heard and was missed by the rest of our team became our maneuver point in the next session.

Once you explored the opportunity make sure to get the most out of it. But always remember not to lose your win-win approach. If you lose your win-win approach then you are going to miss the opportunity.

The Opportunity Trap

You should contemplate the possibility of opportunity trap when it comes to M&A negotiation. Collecting enough intelligence during negotiations process is not the end, but it is just the beginning. A golden eagle negotiator has the ability to hear beyond what is said in the meetings using the collected information. You should be able to develop different scenarios and analyze each of them. Your worst-case scenario is the opportunity trap.  Make sure that nothing is concealed from your eyes. Look for the traps that you might fall into and try to make sure you have had a panoramic view before getting to the table.

I have worked with people who believe in having a devil’s advocate in their negotiation team, but my experiences in several M&As proves that this approach leads to concealing the opportunity traps. When you start the M&A process in which both sides come from different organization cultures, it is not a simple task to compromise on some issues. In such cases, the more friendly you approach, the better you manage cultural distance. Thus, as mentioned before, stay as friendly as possible even bring personal common interests, hobbies, etc. in the session so that both sides can feel more comfortable with each other.

Once you make sure you are not in an opportunity trap, just proceed, but when the deal seems to be an opportunity trap, you can walk away. Sunk costs are discussed quite well in the book “Winning on Negotiations” by Harvard Business Review as a walk away obstacle. Just because you spent some cash on the negotiation’s process does not mean you should proceed. Opportunity traps can be more harmful than anything else for your business.