Dealonomics

How do you know when it is time to close the deal? If you were paying careful attention, you will have seen the clue in the section on ‘How to pitch your proposals’. Here it is again:

When you know exactly what the other person has offered you, don’t say no and don’t say yes. Calculate the value of what they want, and decide what value you want in exchange for giving them what they want. In other words, trade value for value. And keep trading until you hit Marbles. Once you spot Marbles coming onto the table, it is time to close the deal.

There is a rhythm to a deal. You make the first proposal, they respond, you adjust your proposal, they counter-propose, discussions take place, you propose again, they counter, and so on. After you have moved (gracefully?) through your Key Issues, you start hitting your Secondary Issues or Marbles. You may have already used a few Marbles to adjust the value of your Key Issues, but as soon as you recognise that you are trading Marbles for Marbles, it is time to close.

Even if things are goings swimmingly, do not be tempted to keep trading Marbles. There is no point in risking the main deal to get a few extra Marbles. Do not try to scalp the deal. Recognise when you have got enough and the value-for-value quotient is fair, and close the deal.

Janwillem van de Wetering (Dutch award-winning author; 1931–2008) was on the money when he said, ‘Greed is a fat demon with a small mouth and whatever you feed it is never enough.’

When you see the Marbles coming into play, and you’re happy with the total value of the deal, say, ‘I think we have a deal. If you agree, let’s close off without putting anything further on the table.’

This statement not only clearly signals the end of the trading process, but has the added benefit that if there are any hidden-agenda items, the other person either has to put them on the table now, or let them go. The sooner you can find out if there are potential complications, the better. You want to avoid finding the problems after you think the deal is closed.

Before you shake hands, double-check that all the Key Issues have been addressed, and compare the deal you are about to agree to with your Likely position. If you realise that you’ve made a mistake or you need to adjust something, now is the time to do it.

Do not try to sneak anything into the agreement at a later stage. You will ruin the whole deal and damage the relationship. If you’ve left something out, rather say to the other side, ‘There is one last item I need to discuss with you,’ and put this on the table in the form of a proposal. This may reopen the negotiation, but it’s preferable to signing a deal you will regret.

Once you are certain that the deal you are about to sign gives you value and that there are no outstanding items, ask the other person if you can summarise the entire deal. Encourage them to add anything you have omitted, or that they see differently, to the summary. This does not waste time or reopen the negotiation: it closes down the detail.

Do not skimp on this step. Summarise as many times as you need to in order to get clarity. Summarise the whole deal, including any minor Marbles. Summarise summaries if necessary. It is essential to confirm the detail and close the loopholes.

The devil in the deal is in the detail after all. If you are not good at detail, you may want to ask someone to help you with this step. An Analytical is ideal.

Once you have confirmed that everyone agrees the details of the deal, settle the implementation process – who does what, when, where.

You are now ready to put the deal in writing and sign a contract (or email or fax), whatever is appropriate for that specific deal. Nothing should be left to chance.

The sooner you commit the deal to writing, the better. Details tend to mutate into something you no longer recognise if you leave them for too long. So sign the deal while it is fresh in everyone’s minds.

You finally have the deal you want. At last you can agree with Dr Peter Drucker – getting a deal is exciting and fun.

One of the biggest challenges you will face in dealmaking is when someone says ‘No’ to what you want, or the deal goes into deadlock for no perceivable reason. Unless you have very thick skin (which can be a blessing in dealmaking), it is difficult not to take this personally.

Sometimes it is personal, sometimes it is not. The other party may have restrictions or issues about which you know nothing, and which they may not be in a position to share with you. Then again, they might be taking a stand or simply be a jerk. There is nothing you can do about that.

When you feel that you’ve been kicked in the teeth, here are a few pointers to help keep up your morale.

Before you throw yourself to the floor and weep uncontrollably over the rejection, give the deal another try. Haul out your inner six-year-old.

Is there an alternative route you could try, or other carrots you could dangle? Or another angle of persuasion? What about seeing the Highlander?

If you are not able to convince the other party to reconsider, have a look at the point below on ‘When they say no’.

Is the rejection about you, or about them? People are often reluctant to come straight out and tell you that it’s you.

Think about when someone has broken off a relationship with you, or retrenched you. Did they not say, ‘It’s not you, it’s me,’ or ‘It’s not you, the company needs to reduce costs’? They will sidestep the real issues – which could be that you aren’t what they see as the perfect partner or employee, or their mother/boss does not like you, or you dress funny – and make up a story. People also invent problems, such as ‘We have decided we need someone with x experience after all’ to avoid telling you the reason they don’t want you to get the deal.

Seldom will you meet someone who is horribly heartless, brutally unkind or completely honest. While an open rebuff is hard to handle, not being told the real problem means you don’t know what to fix. You can try the questions below in ‘When they say no’, but it may not help.

You are sure to get kicked in the teeth at some point in your career. You may be fired, retrenched or miss out on the promotion you really wanted. It is easy to play the blame game, or to get down on yourself. You may shout and accuse, or want to throw yourself on your sword.

Sometimes you will need to fight back, and other times you will need to accept the rejection with dignity. It may take a while for you to regain your self-esteem and confidence, but this is exactly what you have to do.

Nobody likes to be criticised, even if the criticism is deserved or beneficial. You are going to be criticised during your life: in this you have no choice. What you can choose, however, is how you respond to the criticism.

There will be times when no matter how well you prepare, no matter how cleverly you persuade, no matter how reasonable your proposals, and regardless of how many different options and approaches you have tried, the other party says ‘no’.

The first step after a ‘no’ is to find out why you are not getting what you want. Is it because the other person has gone below their Bottom Line, or you said something that blew the deal, or you have pushed too hard?

How do you find out the reason for the ‘no’? Ask the other party why they are saying ‘no’. When you are able to understand the problem, you can rethink your strategy. This could mean that you have to change your Ball Park, but that’s okay. Your Ball Park is a plan, not a blood oath. Be flexible, be creative and don’t forget about your Marbles.

People are strange. They might not be prepared to give you the reasons for rejecting your proposal.

If you get an answer, and it is one you are able to accommodate, give them what they want so that you can move the deal towards getting what you want.

Even if the other party is asking for something that seems ridiculous, it may still be possible to close the deal. How would an expert dealmaker handle this situation? Experts never say ‘no’. Even when the other party wants something pretty outrageous, the expert dealmaker merely makes sure that they will get something equally outrageous in return. ‘If you want the position of managing director instead of marketing manager, then you need to buy 20 per cent of the company.’

By asking for something extreme in return, the expert dealmaker is able to halt ridiculous demands in their tracks – without the other person losing face. You can do the same. Back to our marketing manager position. If the prospective employer wants you to work for zero salary in your first month so that they can assess you, rather than being affronted and storming off, answer, ‘If the assessment is handled by a mutually agreed upon person, and you are prepared to pay me triple the salary in the next two months, then I will consider your proposal.’

With all three reasons, you need to go back to sales school. Persuade them of the merits of your proposals – what is in it for them and their company – and be prepared to make new proposals.

When the other person’s Needs are not being addressed, you have not included enough about outcomes and deliverables in your proposal. You have to convince them that they will benefit from what you are proposing.

If you are not meeting their Wants, they may give you a ‘no’ without a reason. Wants are personal, and seldom openly put on the table. They can also be linked to ego or saving face, which makes the situation more difficult. In either case, a little persuasion goes a long way. Link the persuasion to a new proposal if you must.

If the ‘no’ is the result of a perceived lack of value, you are probably asking for too much and giving too little in return. This may stem from the cost of the deal being too expensive for them, or the deal is going below their Bottom Line. Find out exactly where they see the imbalance, make a proposal that is more attractive to them, and persuade them on the merits of the new proposal.

When they are unskilled, you need to help them see the benefits of your proposals, and suggest counter-proposals they can make to you. It is a bit like playing chess with yourself. The easiest way in which to do this is to say, ‘What if?’ or ‘Just suppose’. ‘What if you change this and I give you that?’ ‘Just suppose I was to move here, you could then move there.’ It’s not that simple, but it may be what needs to be done to save the deal.

There may be times when you have tried everything in your power to get the other person to give you what you want. You have understood their concerns, addressed their Needs and Wants, and persuaded them that what you are requesting and offering has merit and value. Yet still they say no. You have hit a brick wall.

The reverse may also be true. They are asking too much of you – maybe wanting you to go below your Bottom Line or beyond your mandate – and you see your position as immovable and can go no further.

Most people are afraid of deadlock. Even the threat of deadlock is enough for them to show flexibility and make concessions to avoid getting stuck. Deadlock is seldom good news, but if you are able to understand the reasons for the deadlock, you may be able to save the deal from unravelling.

Deadlock occurs when one party (or sometimes both) does not want to proceed with the deal on the table. It can be intentional or un -intentional. The first step is to establish if the objections are genuine, tactical or due to a lack of skill. Let’s tackle the latter first.

Inadvertent deadlock is usually the symptom of the other person being unskilled or contrary. Sometimes they do not want to concede something, and the only way in which they know how to stop this from happening is to say, ‘No’, and not move from that position. The difference between a ‘no’ and deadlock is that with a ‘no’, you may still be able to get the other person to move. Deadlock = no movement.

Other times deadlock arises because they get stuck without Marbles. No Marbles = no movement.

On other occasions, they are digging in on an issue for political reasons, or being pig-headed. Amateur dealmakers are inclined to get stuck on minor issues.

In any of these scenarios, you need to try to find out if there is room for flexibility or not. Use the five ‘no’ questions above to help you with this. When you are working with inexpert or difficult people, expect them to be petulant and reply ‘none’ or ‘no’ to your questions. Keep probing, give them ideas for Marbles, and dangle carrots in front of them. If you cannot get them to move, you are in deadlock.

When deadlock is intentional, it is because one party has a genuine problem, or deadlock is being used as a tactical ploy – for power and/or money.

Genuine objections are easier to deal with, unless both parties are deadlocked over the same issue. When the latter happens, someone is going to need to save the deal by being flexible and presenting proposals that overcome the stalemate. What gives you flexibility? Marbles. Even when you are using your Marbles, though, you may still get stuck.

Concerns that are frequently genuine are that it is cheaper to maintain the status quo than to negotiate, or that one party wants to postpone a decision or the deal.

No matter the reasons, use the five ‘no’ questions to test their objections and then make a call. Is it genuine deadlock? Is it cheaper to give them what they want, or to let the deadlock continue?

When deadlock raises its head, there are always going to be implications – financial, precedent, personal, social and political factors. This is the time to use your judgement. Should you do everything within your power, including ‘surrendering’, to break the deadlock? Or do you walk away?

When should you give up? When is it better to walk away? When should you stick it out regardless of the consequences? Very seldom does an expert dealmaker throw in the towel, so should you be walking away?

The answer to these questions, as with many other philosophical ones, is ‘It depends’. You need to use your judgement.

Walking away should not be done lightly. Good deals are lost because someone has not bothered to persevere (lazy), or they throw in the towel when the going gets rough (wimp), or they quickly exit for fear of being rejected (egotist).

Distinguish between when you need to walk away and when you are being lazy or a wimp or an egomaniac. Only if you have good reason to quit should you walk away.

An expert dealmaker will only walk away from a deal if he has very good reason for doing this. But there are a few situations when you may not want to close the deal.

In real life, unless it is a matter of life or death, don’t sell your soul. Be true to who you are and true to what you believe. Remember Polonius’s last piece of advice to his son Laertes in Shakespeare’s Hamlet: ‘This above all: to thine own self be true.’ If someone is asking you to do something that goes against every grain of your being, ask yourself, ‘Under what conditions could I agree to this?’ and then reply. You might find that ‘none’ is the answer in your heart, or that there is still room to be flexible.

Selling out on who you are, and what you hold dear, carries a terrible price. Been there, done that. It takes forever to recover from betraying yourself. Very few deals are worth sacrificing your soul.

When someone else, maybe your boss or life partner, has set the mandate and determined the Bottom Line of the Ball Park, you can’t just drop below the limit. If you have cause to exceed this limit, you need either to renegotiate your mandate or walk away. If your boss or partner has agreed to your Marbles beforehand, you can usually keep above the line.

If you are working with a self-determined Bottom Line, again ask yourself, ‘What are the conditions in which I will go below my limit?’ Expert dealmakers do not walk away, they put a price on the demands being made of them. They have a bag full of Marbles and understand the exact value of each one. No Marbles = no flexibility.

If doing the deal with the other party is excruciating, and every single move is a struggle, and you’re not sure you want to interact with the other party, use your judgement. Decide if you want to walk away or not.

It is very difficult for someone who has the deal in their sights to stop and take stock, but sometimes this is what you need to do if your internal alarm bells are ringing.

It may be expensive to walk away, but the cost of doing business with someone who has shown dishonesty or greed, or who has the potential to renege on what has been agreed, is going to be a nightmare.

There are people with whom I choose not to engage, as we do not share a common set of values. Even as a skilled dealmaker, I am not prepared to do deals with people who contaminate my soul.

Walking away is often a difficult decision, especially if the situation is personal – resigning from your job, leaving a toxic relationship, stopping a bad investment. Don’t punish yourself. Giving up is a tough time, so the last thing you need is you beating up you. Pick yourself up, dust yourself off and be prepared for the next round.

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