Changing styles . . .

Brent wrote in recently to remind me that I wrote in M&A Part I – Lines in the Sand that I’d talk a bit about changes in my negotiating style over time. I actually interested to hear if other people have had similar experiences, because what I’m about to describe both seems like a natural progression and might also be termed ‘growing up’. I had an odd introduction to more formalized negotiation a few months into my first corporate job after leaving Wall Street. The company I worked for decided to embark on a few acquisitions and I was assigned to work on these with my boss who was the head of the business development group.
Eventually we settled on our first deal and, after negotiating the purchase price, my boss turned to me and said something to the effect of “go get it done.” Disappointed that I didn’t get to participate in what I thought was the real action I accepted my role as the grunt on the deal and started work on processing the deal. Much to my surprise at the time it turned out that negotiating the price was about 5% of the actual deal and there were lots of other terms to be worked out. I had the great fortune of working with an outstanding lawyer (who I’ve since done several dozen deals with over the years) who took sympathy on this (at the time) 23 year old who knew nothing of either negotiation or m&a deals. My initial negotiation style arose out of these circumstances and was at the same time defensive (I didn’t want to admit when I didn’t understand something – which happened pretty often – and I understood nothing of the nuance of the terms I was negotiating) and brash (I didn’t fully understand the give and take nature of negotiation and thought I needed to ‘win’ on everything). I learned quickly (and in a few cases embarrassingly) that this style wasn’t going to get many deals done, but in thinking back on this period of my life realize that I maintained a somewhat brash style to negotiating deals (both m&a and business development) for quite a while (my original boss was promoted and I ended up working for someone who was more involved in the day-to-day details of the deals we were doing but who was also very harsh in his personality and negotiating style, which I think I picked up to some extent).

This style didn’t fit me very well, however, and by the time I was running an m&a group in the late 90’s and, importantly, operating in a much more competitive m&a environment, I had softened my approach quite a bit. Realizing as well that I possessed much more knowledge about the terms that I was debating with business owners whose companies I was purchasing (I’d learned a few things over about 20 deals at that point) and that the perspective they were getting from their lawyers was not always particularly balanced I also discovered the benefit of both negotiating for a ‘fair’ deal and taking the time to both fully explain my position on an item and to listen carefully to theirs (in my earlier days I would sometimes say things like “I can’t do that, because I just can’t” and in some cases draw a line just because I felt like seeing if I could get a term to swing my way; these days I’ll almost always provide my rationale and generally only pick a handful of terms that I really, truly care about to discuss).I still modulate my style some, depending on the type of deal that I’m working on (m&a exit vs. m&a where we’re still investors vs. financing, etc) and also in response to the person I’m negotiating with but I generally find a congenial approach to both lead to best results (including a higher probability of getting deals done) and causes less stress and brain damage (which is important to me; life is too short to have a heart attack over a deal term).

I actually find it pretty amusing to think back on how little I knew when I started doing this . . . which is a good reminder of how I’ll probably feel when I look back on today 10 years from now . . .