M&A Part II – A few thoughts on negotiating skills

This is the second in a series of posts on the art of mergers and acquisitions. See the first post in the series here.

I think the most important part of being an effective negotiator is not being a persuasive talker (although that is a skill that is helpful) – but rather being a very good listener. Its tempting to spend your time in a negotiation thinking about all the great points you can make and concocting elaborate strategies for getting your views across to the other party, but one can’t really do that and effectively hear what someone else is saying at the same time. The best negotiators spend the time when someone else is talking to listen intently to what is being said, knowing that there’s always plenty of time to think about your response after the other side has made its point. Personally I like to take detailed notes of the points that are being made – it keeps me focused on the conversation (helpful in long negotiating sessions) and provides me with a record to later use in working on my responses. I also generally don’t like to take a combative approach in negotiating and listening to what people are actually saying lets me better understand what points are truly most important to them and, perhaps more importantly, the rationale behind their thinking.

There’s a corollary to this idea that’s equally important. Silence can be your best friend in a negotiation. It’s a natural by-product of listening well (since you won’t necessarily be ready to respond the second someone else stops talking) and something that should be embraced. Interestingly, most people seem to be afraid of long pauses – particularly in rooms full of people. Their natural reaction to this is to try to fill the silence with words, which leads many people to just keep running on if you aren’t talking. This can be a huge advantage – I’ve sat across the table from people I was working on a deal with numerous times and watched them start to back off the positions they had just firmly stated without my ever having to say a word. I like silence in a negotiation – it gives me time to think, to size up what the other side is really saying and to look at their body language (I almost always look directly at the person I’m negotiating with in a pause – it tends to provoke them to keep talking, which generally works in my favor).

Comments

[Luca]

Being a good listener in a negotiation is key to understanding what really matters to the person across the table from you, which you need to know in order to structure a deal that will be perceived as a winner by both sides.

[Vik]

Your comment about silence during M&A negotiations is very true. I was recently involved in the sale of a company to a Japanese buyer. The Japs use silence as a way of getting more information from the other side. Most people are uncomfortable with long silences and end up blurting out more information than necessary to fill up the long pauses.

Vik