Game, Set and Match - Jo Haigh
Deal making in terms of selling a business, buying one or at the moment perhaps more likely raising finance for one, is a game and not always one where the rules are clear or even when they are clear, adhered to.
As I come through to the end of a particularly tough game, slightly battle scarred but I hope successful I find myself pondering on lessons learnt and if indeed my game skills are improving.
The deal, an MBO, was immediately at appointment an interesting and challenging game. Involving, as it did international vendors and a business in decline.
The vendor had the choice of selling the company to a 3rd party, but had been unsuccessful and indeed in the process had alienated the CEO without whom the business had little value.
When the realisation had dawned on the vendors that the MBO team, now the only option for exit, had negotiated themselves into a positive position. The vendors were left with a take it or leave it attitude and at certain points in the negotiations it was clear that the vendors were indeed inclined to leave it and looked seriously at winding the business up.
In order to retrieve what would have been frankly a disastrous situation intervention at a high level became inevitable. Although this may be big business and the deal value was multiple millions, teddies were being thrown out of various cots at horrific speed.
The value of a good negotiator is evident but never more so when relations breakdown as in this case. My usual role is often that of ‘bad cop’ to my clients ‘good cop’ particularly when the deal becomes difficult but both parties have working relationship to maintain post completion. In this case however my role became that of conciliator, bridging gaps in the deal issues wider than the Grand Canyon.
One thing I have learnt over many years in this position is that it is essential quite quickly to allow your opponent to perceive of least of an early win. Not only does this suggest your team are willing to deal again but can disable the other side by lulling them into a sense of false security. A well known negotiating technique is to allow little wins on the assumption that you will get a big win later.
Like a championship tennis game the lead can change by a poor shot which in turn can cause a loss of confidence of such magnitude that may mean that the stronger party throws the game.
So keeping your nerve and remaining calm throughout a very tumultuous process is a huge advantage in any deal even if this, on occasion, means taking time out from difficult decisions if only for 10 minutes.
Never respond in anger in a debate, never send emails that slam doors, particularly don't answer such missiles early in the morning or late at night when your reasoning is perhaps not at optimum levels.
Win win is a phrase much used in negotiation skills training and I applaud its position and endeavour not to pay lip service as so many in my field seem to do.
This conciliatory approach may not always get me the most lucrative deals for my client but it nearly always gets them the most satisfactory deal. Particularly those that have long term implications such as earn out processes in place.
As the end of all ‘matches’ I can honestly say I can look all parties in the eye and shake their hands without worrying they may have a knife in the other one.
This takes nothing away from doing the best deal you can for clients, in fact I believe it enhances the transaction.
If my clients and I can sleep at night after a tough deal is completed then that cannot be a bad thing.
Jo Haigh
Head of Corporate Finance for MGR
www.mgr.co.uk
Jo.haigh@mgr.co.uk
0844 826 2851 / 020 7644 9674