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Are you ready for the “Hardest Question”?

by on May 21, 2015

Negotiation-BusinessNegotiations happen all the time in business.  Some people think they’re naturally good at it.  Some take pride in being hard negotiators. Some look for a win-win solution.  Everyone will tell you that the key to negotiation is preparation.

So let me ask you this: Are you prepared to answer some of the toughest – and most common – negotiation questions?

Questions like:
• “This is my final offer. Take it or leave it. I need your answer right now. What’ll it be?”

• “Why do you really want to sell this business [or car, house, etc.]? Are you aware of anything that could reduce its value in the near future?”

• “What are your minimum compensation requirements?”

• “Aren’t you too inexperienced for us to risk giving you this contract?” 

In negotiations you know you should prepare by assessing each side’s interests and what are possible points of disagreement, imagining possible agreements, factoring in personality and culture, thinking through moves and possible countermoves, and so forth. Yet too often we neglect what I’ve dubbed the “hardest question.” This refers to a question the other side might ask that, to you, feels especially difficult to answer.

Faced with a seemingly straightforward question, you can feel flustered or trapped into giving an answer that puts you at a disadvantage.  Yet such questions are often manipulative tactics masquerading as innocent queries. You should feel no obligation to reply to an exploitative question as if it were asked in good faith.

Here are some ways to respond to these types of questions:

  • Reframe – Acknowledge the question then reframe it in reciprocal terms, and shift to a more positive focus.  For instance, to a prospective investor who asks if you’re pursing other opportunities, you might say: “Of course I’m pursuing other possibilities, as I’m sure you are. The question is, how well do your interests fit with my capabilities? I see genuine potential. Let’s explore it further.”
  • Turn the Tables – This is one of my favorite techniques.  To the CEO looking to sell her company to you who asks “What is the absolute maximum you’d be willing to pay and I’ll see if I can shave off a bit”, I’d respond with something like: “What is the absolute minimum you’d take and I’ll see if I can throw in a bit.”
  • Seek “objective standards” – This technique is used extensively in M&A discussions.  When asked to disclose your bottom line, you can shift the focus from what you will or won’t accept to “objective standards” beyond your control. It requires some understanding of the market you’re in.  When asked this ‘bottom line’ question by a bigger company looking to buy my company i could say: “It’s important to me that the sale price be comparable to those of similar companies in the market today. I don’t expect to be paid less, or more, than is appropriate. Here’s some objective data on comparables. Let’s figure out what’s fair.”
  • Reinterpret a demand or ultimatum –  When confronted with an ultimatum or a demand, you can treat it as conditional, not absolute, and redirect constructively: “If this were a take-it-or leave- it offer, I’d be uncomfortable with either choice. But we should be able to figure something out that works better for both of us. Let’s put our heads together.”
  • Reverse the burden –  When asked about developments that might reduce the future value of the business you’re selling, law and ethics require you to disclose certain material factors. Beyond those, you might truthfully respond: “While the future is always uncertain, it’s been a good company for me so far. I’m not in the prediction business, but I want your due diligence to be full enough to satisfy you on valuation.”
  • Address the underlying concern –  Honestly address the concern behind a difficult question while avoiding the need to reveal inappropriate specifics. To the employer who refers to your family responsibilities, for instance, you might say: “Although personal issues are private, I can tell you that my spouse is very enthusiastic about the possibility of my taking this job. We have all the supports in place for me to devote my full energy to its demands.”
  • Rule out inappropriate topics – Of course, some questions are legally or ethically out-of-bounds; for example, potential employers may not lawfully ask about race, religion, national origin, or age. You should be prepared to calmly respond to such queries, addressing the legitimate intent of the question when it is appropriate to do so: “Though questions about national origin aren’t permitted, you should know that I am fully authorized to work in the United States.”

While preparation is important in negotiations I don’t believe in memorizing responses.  In the middle of a negotiation, when a hard question” is asked, you don’t want to worry about remembering your memorized answer.  Just remember the principles, use a technique that you’re comfortable with and you’ll find that you’re able to stay in control of the negotiation, and that will produce a better result for you, even if that means walking away from an unsatisfactory agreement.

p.s.

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation: a Proven 5 Step Process.

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From → M&A, Strategy

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