How to negotiate a business deal in five steps

Conflicts are inevitable; letting it wreck your business is not. There will be deals that you will risk losing because negotiations hit a snag. There will also be disputes that, unmanaged, can deteriorate into serious expensive distractions.

Many of the most successful, high profile companies (Apple, Samsung, LinkedIn, Snapchat, etc.) have spent a day in our offices successfully managing such situations. Why do they bother?

It is simple physics. Direct negotiations have built in limitations - dynamics that rapidly become more pronounced as you approach an impasse. Understanding these dynamics is key. We have been programmed by millennia of natural selection for fight or flight and that is a good thing. Our furry antecedents, who did not fight or flee in response to a perceived threat, didn’t get to pass on their genes. And it is still a jungle out there.

What is counterproductive is when we get into a reactive cycle. When the inevitable happens, and we start having issues with business partners, an investor, even a co-founder - that hard wired reactivity starts to kick in, and pretty quickly every action starts eliciting an equal and opposite reaction. Even well intentioned actions. Newton’s second law has no exceptions.

What to do?

You can power more energy and resources into pushing for a resolution. And that usually can work for mild issues. Fortunately, there are a few guidelines that almost always work for direct negotiations.

1. Get the right people to the table

In our work, prior to commencement of any settlement negotiation, we predicate the mediation on having the right people present. In other words, having the ultimate decision maker(s) present is crucial to reaching a settlement. Before you start the negotiation, ensure that the other party is fully empowered to make binding commitments. You don't want to find yourself in a position where you believe you've struck a deal, only to discover that your agreement must be approved by someone higher in the chain of command. In our experience, when time elapses, deals fall apart. Get the right people/the key decision makers to the table. 

2. Be prepared

You should always be prepared in a direct negotiation. Successful negotiators have a plan. If you want to be effective, you have to fully engage, using your formidable frontal brain, logic, reason and skillful techniques.You should brainstorm creative approached but don’t be tied to them so that you can explore the entire terrain without restricting yourself to a single path. While you should know your priorities, alternatives and bottom line, it is equally, if not more important to be open. Be open to new data and information and weigh it objectively to determine whether a resolution is possible.

Preparation includes building rapport with your counterpart. Spend time understanding their organization, company culture, even how they assess and hired employees. Understanding who the other side is will better help you assess whether a partnership or merger is workable (how will your employees be combined and what challenges will you face?)

3. Don't underestimate your risks

You know your strengths but have you given adequate weight to your risks? Resolution of any high stakes dispute requires material compromises that responsible business persons should not be asked to make without first being presented with a rational basis for modifying risk assessments. Objectively evaluating your risks is crucial to reaching a settlement that both sides can live with. Mediators don’t act under any delusion that they bring any greater expertise given the formidable expertise usually gathered on the day of mediation. What they do bring is something that is so swiftly compromised in the course of a negotiation - that is the ability to assess from outside. You should put sufficient value and energy into assessing your risks.

4. Don't get lost in the forest for the trees

Know what your key issues are and focus on them without getting side-tracked. You don’t need to dazzle your opponent with your footwork by hitting on every conceivable point. Instead, hone in on the issues that will drive a resolution.

5. Memorialize the deal

Lastly, once a verbal resolution is reached, memorialize it into a short form one to two page agreement. Don’t prolong the process by trying to hammer out every nuanced detail. Get the key points down because deals can die due to lack of momentum.

Effective negotiation strategies in business are crucial. Consider these steps the next time you engage in a negotiation. And remember to keep your cool because Newton’s second law has no exceptions.

This is a guest blog and may not represent the views of Please see for more details.Thumbnail from gettyimages.


Our Companies

Quick Links