Successful M&A Negotiation Tactics
Certain tactics can be helpful in the process of negotiating a successful M&A deal. Remember: Negotiating isn’t about getting everything you want, but about finding a deal that is agreeable for both sides.
M&A negotiation: Offer a conditional if-then agreement
You should refrain from offering up a concession without getting something else in return. As you try to work out a deal with the other side, don’t simply offer a concession (or ask for one without expecting to give something back).
Instead, say, “If you can agree to A, B, C, and D, then we can agree to X, Y, and Z.” If the other side balks at your idea, you’ve not conceded a point; you’ve simply offered an idea.
Because the idea was rejected, any conceded points are therefore removed from the discussion. This bundle approach often works very well when coupled with saying, “Here’s the deal that gets it done.”
If the other side offers a concession without asking for anything in return, accept immediately and move on to the next point.
M&A negotiation: Don’t be afraid to haggle
Haggling, or the incessant back-and-forth volleying of offer and counteroffer, is a typical negotiating tactic. You say 50, they say 30; let’s agree to meet at 40. Is haggling permissible? Of course! It’s a natural part of any negotiation.
Although you should pad offers to allow for some wiggle room, haggling can get tiring. It can quickly become a waste of time. Padding an offer or counteroffer can help, but structuring a deal that you can support is the most important aspect of getting a deal done.
Although you shouldn’t go overboard when structuring a deal or a counteroffer, don’t be afraid to push the envelope. You never know whether the other side will accept your proposal unless you ask.
Don’t negotiate against yourself. If you submit an offer or a counteroffer and the other side says, “Not good enough; please try again,” hold firm and tell the other side, “This is our offer.” But you can proceed to haggling if the other side gives you a counteroffer!