The reality of modern business environment is, people will possibly not pay you what you are worth or what you deserve but only pay that which you demand or negotiate. It’s your job as negotiator to convincingly communicate what you deserve to them and justify the same. Putting up good value proposition is not enough. How you pass your message across to counterparties, coloured with some dint of ‘blackmail’, could just go a long way in delivering you a good value or price. Great deal makers are quite good at making their stories sound compelling. An employer or business counterparty is under no obligation whatsoever to pay you more if you agree to take less. So, you decide what your value is and push for same.
Interesting thing about deal making or negotiation is, we all get involved in it somehow. When you go to open markets to buy few household items, and they throw prices at you; you don’t just pay up. You negotiate the prices before committing yourself. Or in the alternative, you compare prices across related markets. Not only that, if you realized that the price in Market A is far lower than what obtains in Market B, you could even decide to take advantage of the arbitrage by becoming a new supplier of the items from Market A to customers in Market B. Similarly, when you’re being interviewed for a role, and they start asking for your current monthly take-home and salary expectation, you sure want to put on your deal-making cap. Negotiation also applies to more sophisticated cases of a start-up company seeking funding opportunities; big companies acquiring or merging with another; seeking public utilities concessions; governments pursuing bilateral or multilateral trade deals amongst others.
Just to be clear, deal-making and negotiation don’t necessarily mean the same. Deal-making relates to an art of closing out on business agreements, transactions or arrangements, while negotiation has to do with a discussion held towards reaching an agreement. Both are seemingly interwoven, but you can make a deal without negotiating for terms thereof. Most upcoming artists or actors sign agreements with record labels or movie producers without even looking at the documents, nor get lawyers to review same. They are a good case study of how never to make a deal. Same applies to many desperate business start-ups.
In this piece, I hope to share few tips with you on how to be a good deal maker or negotiator. Not only that. As we more along, I shall be making some anecdotal scenarios and examples of how people make deals or originate transactions, and hopefully in the process, open your eyes to opportunities sitting right there on your table. And also note, I won’t be bothering you with some hawkish or Trump-type deal making narratives, but do promise to possibly change your mindset. Forever.
Let me be upfront here again. To be a good deal maker or negotiator, you must be confident, resourceful, skillful, visionary, and open-minded. You must be ready to change your mind when facts change. And more than anything else, don’t you ever appear desperate. Admittedly, anyone can be in a desperate situation. But don’t let your counterparty see the desperation in you. In deal making, when you put up a face (a facade though) of someone who has nothing to lose if parties walk away from the negotiating table, it’s called Posturing. It’s exactly what dogs do when they bark at strangers. It’s not for lack of fear but barking gives strangers an impression of a courageous and ready-to-fight dog.
Deal making is an art, and being a good negotiator is not necessarily some in-born quality. It is a skill you can learn and nurture over time. And that begins with how you handle little deals in everyday life decisions. Generally, there’s a process around deal making, especially for complex transactions of a billion US Dollar scale. I’m going to be sharing some learning points from a couple of deal making transactions I have been privileged to partake in, involving oil trades, corporate acquisition bid, critical asset acquisitions, management buy-outs, and startup fund-raising amongst others. And here we go:
One. Define Your Values and be Firm with Them
Like I noted earlier, we all are involved in some business deals and negotiations or another. People looking for job also negotiate their pay and conditions of service. If you’re a bad negotiator and have no clearly defined values or ethical guide, you will always jump from one employer to another in search of bigger pay. Same applies to a contractor or vendor who doesn’t have clearly defined values. Counterparties could potentially make unethical and reputation-damaging demands of you and take advantage of your desperation. More so, when you lack in key values, people price you terribly low in business deals. By values, I mean not just those ethical vibes we often throw around (Integrity, Honesty, and Accountability etc.), you must clearly convince yourself on what you will never do, and what you can possibly do under certain extreme scenarios. Be very clear and intentional about your ‘dos’ and ‘don’ts’. You must set certain ethical baseline for yourself. It will save you from possible blackmail or weird posturing or demands by your counterparties (be they interviewers, investors, suppliers, customers, or service provider).
Two. Identify your Leverage
Deal-making is like a war. No one goes to war, without adequate defence systems and tactics. Neither does anyone go to war to sit pretty and defend away. To have a beneficial negotiation, you must have an irresistible value to offer your counterparty. Do your homework well. Make efforts to understand your opponent’s needs, strengths and weaknesses. You must have something which the other fellow desperately needs. And that’s your leverage. Lack of leverage in negotiation keeps you at a disadvantage point, and thus leaving you at the mercy of the counterparty. As a job seeker, you’re being considered for a role because the employer has some problems or gaps to fill in his/her business growth aspirations or control environment. Your portfolio of skills, competences and track record and how same fit into the employer’s talent requirements constitute your leverage, and how you sell yourself sometimes determines how much you can command, in terms of pay and other benefits.
The employer has a leverage too. You’re not the only talent around. There are many better qualified candidates out there. If you’re currently out of job and desperately in need of one — that is another big leverage for the potential employer. Typically, in a situation like this, salary negotiation will most often be at his/her vantage point. On a personal note, I generally advise people, except in rare cases, that if you want to leave one job for another, don’t resign from the current role, unless and until you’ve received Offer Letter and even done medicals on the new role. There are exceptions to every rule, I must say. Moving from Job A to Job B provides a better leverage than moving from Jobless state to a new Job. Employers will take advantage of your vulnerabilities.
In more sophisticated deals involving buying and selling, mergers and acquisitions, startup fundraising, corporate buyouts (buyout is when the people managing your business agrees to pay you off, so that they can become the new owners), etc., parties on both sides of the negotiation divides always look out for each other’s soft spot and any element of desperation. Both parties look out for each other’s value expectations and use same as a pricing tool.
The key point here however is, whatsoever the negotiation you’re having with anyone, always look out for their needs and weak points and use same to define your value propositions. And there you have it.
Three. Define Your Worth and Stand by It.
I’m not here to sweet-talk you or play to the gallery. We all have a price. Pure and simple! But I must say, no price should ever be enough to buy our conscience. When negotiating for salary for instance, look beyond the money in defining your pay expectations. Let your overall needs per unit of time guide your thought process and decision. Some people work in well-paying but terribly corrupt and toxic environments. Depending on your values, what anyone in such environment might need at some point is sanity and some reasonable but competitive pay elsewhere. Generally, always look beyond the money. Consider other non-financial benefits attached to any new possible role if you’re being considered for one.
And even if all that matters to you is money, it is fine. Very fine. You must be intentional and deliberate about your pay demands. If you have a problem defining your worth, look around for colleagues across different industries handling related roles and of the same experience range with you. The average of what they earn speaks to what you should be looking at as a baseline. Then, you can quote a salary range expectation to your prospective employer. When asked for salary expectations, you don’t just quote a single figure. Give a range, buddie! Ask for a compensation that’s enough to keep you on the job for at least 3 years. Minimum. There’s no honour in having several short experiences scattered all over your CV.
Same applies in business negotiations. If you’re a seller, don’t behave like my tailor. He was to make me some cool cut. He naively made a quote of N5,000 when he knew that I would definitely ‘price’ it down. Much later he came back to say, “no, my fee is N7,000”. But it was too late. When negotiating as a seller, always have at least two figures in your head. Best case price. Worst case price. The worst-case price is that price that’s almost close to your cost, such that any further cut would land you in loss zone. You start a sale negotiation with Best-case Price. But such price must be reasonable, else the deal could be just be killed before it got started. After back and forth, you will likely reach a middle-ground price with your buyer.
As a buyer too, always have at least two figures in your head. The highest you’re willing and able to pay. The reasonable low that would not wilfully hurt your counterparty. See, let’s clear here. Great negotiation deepens an age-long buyer-seller relationship when it’s a win-win. A win-lose or winner-take-all negotiation strategy is draconian and doesn’t always provide a sustainable value. This is my deal-making philosophy.
Four. Choose the Battlefield, if You Can
I urge you to spare some time to watch how eagles hunt for rodents and snakes. Eagles are air-bound. Sky is their base. When they make good catch, they don’t wait to fight you on the land. They change the venue. They drag their victims to the battlefield that gives them better leverage — the sky.
In most job interview sessions, job seekers don’t get to choose the venue of the exercise. The employers or recruiters do. As a candidate, you can’t even choose the sitting arrangement. No point sugar-coating it, the employer has a better leverage here. So as a job-seeker, you need to deal with it. Seek your own leverage.
But in core business negotiations, either as a supplier, customer, investor, or start-up founder, always make an effort to choose the venue of your meeting. Choosing a venue and paying for same, if you can afford it, has a spectacular way of disarming your counterparty. Though, a much more effective way to disarm your opponent is perhaps to have a business meeting in your office. This gives higher leverage. You have a feel of my office ambience. You take my coffee. That goes for nothing. (Smiles).
Five. Exude Grits, Gravitas, Swagger, and yet be Humble
Great deals are not made by weaklings, and neither are they made by disorganized people. How you dress and carry yourself shape how your counterparty’s view about you and, possibly could his/her negotiation strategy. It takes courage, finesse, charisma and problem-solving disposition to making good deals. When you are a party to a negotiation, you must show grits, authoritative demeanor, and fearlessness yet without being haughty or arrogant. Be courageous, yet humble. Be calm and calculative.
During negotiation, show humility when presented with superior facts. Don’t argue blindly, except when such is desirable as mere posturing and defence tactic. Display outside-the-box thinking, general likability, and sacrificing spirit. In more complex deals, you’re likely to be dealing with bullies and hawks with winner-take-all mentality. You must show strength. You cannot afford to give in to blackmail. Deal-making sometimes is a game of dog eating dog. It’s sometimes a game of small fish making attempt to swallow big fish.
Deal-making discussions, as with some job interviews, could at times get hot, ballistic and controversial. You must exercise restraint, tact and discretion. People may intentionally provoke you as a diversionary tactic. Don’t fall for it.
Six. Know When to Take a Walk
In negotiations, parties on both sides of the table make efforts to outdo or out-game each other in order to extract the best value possible. It is a tough competition. But as a good deal maker, know that in certain circumstances, ‘No Outcome’ is the best outcome. Never ever put yourself under pressure to accept a terrible deal. As a job seeker, you don’t just accept every job offer thrown at you. Beyond the money, be sure you really and genuinely want to work in such environment. As start-up founder, don’t be too desperate to accept every loan or equity deal thrown at you. Such deal might turn out to be your company’s death knell. As a big-ticket business deal maker, don’t be too desperate to close that deal if the terms are horrible and commercially indefensible. It’s not every seemingly juicy deal that makes a good deal. The Nigerian Power Sector investors today are licking their wounds because they hoped for Nigerian telecom sector miracle for the power sector too. A bad bet! Life happens anyway.
As a negotiator, having a worst-case price sign-posts when to consider taking a walk. You must have that price-cap or price-floor above or below which you’re not willing to make a deal. It’s a basic requirement in negotiation.
And here is a final rule. Never go into a deal or negotiation without having Best Alternative to Negotiated Agreement (BATNA) on the side. This is your Plan B. This is what gives you the power to say ‘NO’, after endless talks. Know when to walk away.