Earlier in my carrier I negotiated franchises for the largest cable television company in the United States. I learned a lot, had the opportunity to really screw things up (Did not) and learned a great deal about motivation and negotiation styles.
Most people do not go into a proceeding considering what negotiation posture they should take. They are a product of their own self-psychology, history, goals and prejudices – they just show up. Sellers are often too close to the deal. They have an idea of the outcome they desire, but not the path.
Enough said – I want to introduce you to Herb Cohen. He negotiated and settled the NFL Player’s Strike and participated in the START Arms Control Negotiations with the Soviet Union. I read his book You Can Negotiate Anything in those cable television days, it changed my life.
Since the President is in Russia I wanted to touch on “The Soviet Style” of negotiations. I have found that it is the easiest to recognize and historically has had the best best results for my clients.
In You Can Negotiate Anything Cohen reviews and demonstrates several techniques. A few snippets , about “Winning at all cost − the Soviet style” or the “Win-Lose” approach.
Herb advanced six methods used in the technique, four relevant ones as follows;
1. Extreme Initial Positions
a. Buyers low offer or a Seller’s higher than market anticipations.
2. Limited Authority: The negotiator may not have final decision authority.
This is where a broker or attorney comes in handy for the Seller.
This is extremely powerful.
3. Stingy In Their Concessions
4. Deadlines Are Ignored
Cohen goes into several criteria for when and why to use this method. You will quickly see why it works in a hosting M&A environment, primarily:
1. No Continuing Relationship: There is no continuing relationship.
2. No Remorse Afterwards: The end justifying the means.
3. No Awareness by Victim: The victim must be naïve, innocent and unaware.
I find this last one extremely interesting as Sellers are what I term are “first timers”. Without guidance they are often held hostage.
There are many things in life to consider but in buying or selling a hosting company you need to come in prepared. You need to know what strategy you are up against and know when to change that strategy. Pick up Cohen’s book, it is an easy read, but has the right words in the correct order.
I am going into detail regarding several negotiation styles and tactics during my presentation at HostingCom.
See a video regarding this subject added Feb 2010.
Later – Tom
More about Tom: NCC – the Hosting Business Broker Twitter: TomNCC and NCC WebHostBusiness
See Tom at HostingCon present: Dissecting a Hosting Company Acquisition Wednesday, 8-12-2009
About Tom Millitzer
I am an M&A guy. I sell Hosting Companies. I want you to fulfill your dreams. If you are building your company or exiting for success...I want help you grow rich.
I started NCC International in 1994, we represented our first hosting company in 1997. NCC has completed over 400 assignments. If you are considering buying or selling you need to know me. I do not bite.
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