1. Listen and understand the other party’s issues and point of view.
The best negotiators tend to be the ones who truly listen to the other side, understand their key issues and hot buttons, and then formulate an appropriate response. Try to gain an understanding about what is important to the other side, what limitations they may have, and where they may have flexibility.
2. Be prepared.
Being prepared entails a whole host of things you may need to do, such as:
Review and understand thoroughly the business of the other party by reviewing their website, their press releases, articles written about their company, and so forth. A thorough Google and LinkedIn search is advisable here.
3. Keep the negotiations professional and courteous.
This is also known as the “don’t be an asshole rule.” Nobody really wants to do business with a difficult or abusive personality. Establishing a good long-term relationship should be one of the goals in the negotiation.
4. Understand the deal dynamics.
Understanding the deal dynamics is crucial in any negotiation. So be prepared to determine the following:
- Who has the leverage in the negotiation? Who wants the deal more?
- What timing constraints is the other side under?
5. Always draft the first version of the agreement.
An absolutely fundamental principle of almost any negotiation is that you (or your lawyers) should prepare the first draft of the proposed contract.
6. Be prepared to “play poker” and be ready to walk away.
You must be able to play poker with the other side, and be able to walk away if the terms of the deal aren’t up to your liking.Know before you start what your target price or walkaway price is. Be prepared with market data to back up why your price is reasonable, and if you are confronted with an ultimatum that you absolutely can’t live with, be prepared to walk away.
7. Avoid the bad strategy of “negotiating by continually conceding.
That continually conceding points (while not getting anything in return) can lead to the exact opposite of what you are hoping for. If you are conceding a point, make sure to try and get something in return.
8. Keep in mind that time is the enemy of many deals.
You have to understand that the longer a deal takes to get completed, the more likely that something will occur to derail it. So be prompt at responding, get your lawyer to turn documents around quickly, and keep the deal momentum moving.
9. Don’t fixate on the deal in front of you and ignore alternatives.
In many situations you want to have competitive alternatives. This can enhance your negotiating position and allow you to make the best decision as to how to proceed.
10. Don’t get hung up on one issue.
You want to avoid getting stuck on a seemingly intractable issue. A creative solution may come to you later outside the heat of the negotiation.
11. Identify who the real decision-maker is.
You want to understand what kind of authority the other person that you are negotiating with has. Is he or she the ultimate decision-maker?
12. Never accept the first offer.
It’s often a mistake to accept the first offer from the other side.
13. Ask the right questions.
Don’t be afraid to ask the other party many questions. The answers can be informative for the negotiations. Depending on the type of deal, you could ask:
- Is this the best pricing or offer you can give me?
- What assurances do I get that your product or solution will actually work for me?
14. Prepare a Letter of Intent or Term Sheet to reflect your deal.
It is often helpful, at the appropriate time, to prepare a Letter of Intent or Term Sheet to reflect your view of the key terms of a deal. This can help expedite getting to an agreement, save on legal costs, and continue the momentum for a deal.
15. Get the help of the best advisors and lawyers.
If it’s a big or complicated deal, you want real expertise on your side helping you in the negotiations and drafting the contract.