Insights

Negotiation is the art of finding a win-win solution, the art of exploring two positions in order to find a mutually satisfactory agreement. There is of course no magic formula for successful negotiations with potential investors. Here are a few essential elements that need to be taken into consideration:

As in a marathon race, preparation counts for 99% of your success. Not being prepared is preparing a recipe for failure.

It is essential that you determine during the preparation process what the investment opportunity represents for the buyer: Why does he want to invest? What are his economic motives? What are his restrictions? What does he intend to do with it? How much does he expect to earn with his investment?

If you have no alternatives, you have no bargaining power and the investor will exploit the situation to get some concessions from you. While this may seem detrimental, it is often the case that an entrepreneur negotiates with only one purchaser: How do you know if it is the right buyer? Is it the buyer for whom your business creates the most value or the one who offers the best terms? Only a good method of searching for alternatives will allow you to answer these questions.

A good negotiator asks open-ended questions and encourages the other to clarify his or her thinking. He questions constantly, speaks little and, above all, knows how to listen. This active listening helps to develop a sense of empathy, to perceive the other person’s point of view, to take a sincere interest in his or her concerns and thus to be able to maintain harmonious relations.

All negotiations are based on a degree of mutual trust since they are based on an exchange of promises and commitments. You earn the respect of your counterpart by being reliable. Do what you say and say what you do. Keep your promises and never misrepresent. Lies will eventually come to light and undermine trust, which will necessarily be detrimental to the transaction.

Identify the true decision-maker. In addition to the interests of the investing entity, there are the interests of the people who are negotiating. Find out who the ultimate decision-maker is and what his or her personal interests, needs and desired outcomes are. Ask yourself questions about the negotiator: Do they have the power to reach an agreement?

Prepare an overview of the different interests of all parties involved in the negotiations. Is there someone who can torpedo the deal because of other interests? How can you win him/her to support you? Keep an eye on the people involved and their personal interests. Determine if you have support within the counterpart team and understand their motivations.

Have a sincere interest in the other party’s objectives. This will help ensure that he or she also cares about your goals and creates the best mutually beneficial solution. You will maximize your outcome by ensuring that both parties achieve their goals. There will only be a positive outcome if both parties are satisfied with the outcome.

The art of emotional intelligence is a winning card in negotiation. Never forget that in a negotiation with investors, 50% are emotional, so be attentive to the signs you give. Controlling your emotions also means knowing how to stay calm, how to assert yourself while being tactful and diplomat.

A negotiation is not necessarily two opposing positions. The best negotiators must be driven by a desire to work as a team and in a spirit of collaboration. If you better understand the other party’s needs, you will then find elements that are very important to them but less valuable to you. You can exchange them for items that are important to you but less valuable to you.