This article was taken from the October 2011 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
City rainmaker Akeel Sachak (above) is global head of consumer for investment banker Rothschild. His biggest deal was selling Scottish & Newcastle, makers of Foster's and Newcastle Brown Ale, to Heineken and Carlsberg for £10.4 billion. Whether you're negotiating on behalf of a third party or selling your own company, here are Sachak's tips for coming out on top when closing a deal.
1 GET COMPETITIVE "If you can create competitive tension, you can make people do things they might not otherwise agree to do," says Sachak. "It alters the entire psychology of the deal when you have an alternative." Avoid overplaying it, though. "The jungle drums are usually loud enough to do that. But optimise what's there -- if there are two parties interested, ensure they're both fully motivated."
2 DON'T OVERINTERPRET
Second-guessing the other side's motives can sometimes warp your own thinking. "It's a mistake to overinterpret the agenda of the counterparty." Occam's Razor applies: "Most people have a fairly straightforward set of motivations. The more you think about it, the more convoluted your own thinking gets."
3 SET THE LIMITS IN ADVANCE
Know what your limits are before you begin -- and stick to them. "The strategic parameters of the deal should be cast in stone," says Sachak. It's easy to draw a line, but it's very hard to keep to your side of it. "The quickest way to undermine yourself is to start walking away from positions you said were fixed."
4 KNOW YOUR ENEMY "There are big differences in negotiating with a private-equity owner or a multigenerational family-owned business," Sachak says. "And there are differences when negotiating with a Finn, an Italian or a Spaniard. With an English counterparty, you might just hint at things. But in the US, you need to spell it out in words of one syllable."
5 DON'T MISREPRESENT
What's the worst mistake you can make while negotiating a deal? "To lie, misrepresent or over-represent your position," says Sachak. You'll completely destroy any trust between the parties, and without that it's very difficult to reach a deal. "Contrary to popular perception, integrity in banking is fundamental."
6 LEAVE THE UNIMPORTANT
Goodwill is a limited resource, so don't waste it. "A lot of people argue every single point to death without discrimination," says Sachak. "That evaporates goodwill on trivial stuff. When it comes to something that matters, there's none left." Give ground on things that don't matter, so you can fight for the things that do.
7 DON'T BE A DICK
Try to be as user-friendly as possible. "If you're being really aggressive and over the top, it just puts everyone's backs up," says Sachak. "And you end up with a dynamic where the person on the other side of the negotiating table doesn't want to concede anything because they think you're a real so-and-so."
This article was originally published by WIRED UK
