Understand M&A Personality Types to Improve Your Negotiations
Regardless of whether you’re buying or selling in an M&A transaction, one helpful trick for getting deals done is to assess the personality of your negotiating counterpart. You’re liable to run across the following types of people:
The highly motivated: This person has to get a deal done or he’s doomed. He’s so desperate to do a deal that he may — strike that, will — leave dollars on the table.
The ruler-of-the-universe business magnate: He’s from Experienced, Wily, and Cagey, Ltd.; he’s made countless deals and knows exactly what he’s doing. If you find yourself matched against this person, look out. The worst thing you can do is to turn into the highly motivated (see the preceding bullet); you’ll get your clock cleaned.
The know-it-all who’s never sold a company: This person is one of the potential problem children of the M&A world. Quite often, he’s an expert in one field and thus thinks he’s an expert in everything.
The best way to counteract this type of person is by asking questions, reasoning, and getting him to explain his point of view. Avoid simply saying no if you don’t like his proposal. Challenge him. Your only hope of changing this person’s mind is getting him to change it himself.
Mr. Irrational: Mr. Irrational is the insane twin of the know-it-all, except without the strong logic skills. As a result, employing logic and reason doesn’t work. An irrational person is difficult to work with, so your ability to get a deal done is limited.
Give it your best shot and then walk away when the proceedings begin to get petty and frustrating. Interestingly enough, these irrational people often come to their senses after the heat of the battle fades. Don’t fuel their irrationality with endless negotiating and discussions.
The earnest first-timer: The country cousin of the know-it-all and Mr. Irrational, this person is so intent on doing everything letter-perfectly that he misses the proverbial forest for the trees. Work to get this person to do as you want, or he’ll end up irritating you to no end.
The professional: Typically, this type is the best person to work with. He’s a deal pro who’s been around the block many times, leaves emotion out of the negotiation, and works to close a deal on mutually beneficial terms.
The chronic negotiator: This exhausting individual negotiates and fights for excruciatingly minor details over and over again. Although attention to detail is important and worth the hassle, endlessly negotiating those details eventually evokes the law of diminishing returns — you put in more time for smaller and smaller advancements. At some point the nit-picky details aren’t worth the hassle. This person blasts through that point.
The renegotiator: Don’t confuse this person with the chronic negotiator (though the same person can be both). This guy’s MO is to wait until the deal is seemingly done before asking (or demanding) that you change the terms.
Don’t give in; changing the deal at the last minute comes back to haunt you because you may be needlessly agreeing to concessions. Don’t let the rush of closing a deal cloud your decision-making.