As soon as a potential collaboration opportunity has been identified, negotiating a win-win deal is the critical first step in establishing a successful, long-term collaboration. When executed well, both parties reap significantly more value compared to a poorly executed deal. However, a lack of mutual understanding about each party’s motivations can often work against the shared objective of optimising the deal.
How do you avoid a ‘winner-takes-all’ mindset and set the stage for a mutually beneficial collaboration right from the start?
There are four key considerations in my view:
1. Establish a co-operative and trusting relationship with your counterpart
Completing a transaction is a lengthy process requiring patience, compromise and determination, taking in vast amounts of input from many stakeholders. On both sides, this input is largely distilled by a single stakeholder – the deal lead. The deal lead is constantly balancing the requirements of their own organisation with those of their partner, with the aim of finding the common ground between the two. This highly involved process requires good faith between the parties. The bedrock of any successful transaction is therefore a strong, trusting relationship between the deal leads.
2. Be clear on your major issues and why they are important
No matter how attractive a potential collaboration may be, there will inevitably be issues on which you cannot agree with your counterpart. When this happens, it is essential that the deal lead clearly articulates to their counterpart why they cannot align with the position that is being proposed. Likewise, the counterpart needs to productively probe the underlying reasons for this entrenchment, helping to establish a common middle ground where compromise can be found.
Such processes take time and require openness on both sides. If the deal leads entrench themselves on every minor issue, the process becomes frustrated and prevents a mutually beneficial compromise from being reached.
3. Ensure that key decision-makers are available and engaged as needed
In addition to the relationship between the deal leads, having an established relationship at senior leadership level can be invaluable in resolving deadlock on any major issues that may arise. Moreover, engagement with your own senior leadership throughout the negotiations is critical to ensuring that the transaction can progress smoothly, with timely input from senior leaders when major issues arise.
4. Maximise value for both parties
The process of negotiating a deal enables the parties to establish a long-term partnership that creates value for both sides. It is counter-productive for either party to adopt a ‘winner-takes-all’ attitude towards negotiations. In the short-term, overly aggressive and unreasonable tactics will shut down attempts to seek mutually beneficial common ground, leading to entrenchment and a worse outcome for both parties. Even if these tactics work at the negotiating table, the long-term relationship is compromised by feelings of inequity which can taint the collaboration and limit the potential for further collaborations in the future.