M&A Negotiation Key to Success: Know Your Position - dummies

M&A Negotiation Key to Success: Know Your Position

By Bill Snow

M&A deal-making is a lot like playing poker. For example, knowing whether you have a weak or strong hand is important because your hand’s strength helps dictate how you negotiate the deal.

Simply put, a weak hand means you have limited options. Time isn’t your friend. Work as quickly as possible to wrap up a deal (but be wary to not appear too desperate because that tips off the other side to your situation.)

A strong hand means that you have more options; time is on your side. However, you still have to play that hand skillfully. Many novices overplay strong hands and end up chasing an otherwise-willing deal-maker on the other side away from the deal.

The worst thing you can do is to misplay a weak hand. People have ruined their careers because they failed to understand the weakness of their position and pressed forward with a bad play.

Your hand is weak or strong only in relation to the other hands. Don’t just pay attention to your situation; assess the other side’s position as well. A strong hand in one situation may be a weak hand in the next deal.