Dr. Victoria Medvec on the Art and Science of High Stakes Negotiations
Nov 23, 2023
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Dr. Victoria Medvec, a negotiation expert and Kellogg School of Management professor, shares her insights on high-stakes negotiations. She emphasizes the importance of understanding BATNA—Best Alternative to a Negotiated Agreement—and finding ways to analyze both parties' weaknesses. Listeners learn about the intricacies of M&A negotiations, the benefits of making the first offer, and overcoming common pitfalls like deal fatigue. Medvec also addresses generational differences in negotiation styles and the importance of face-to-face communication for success.
Technical due diligence is vital for SaaS CEOs, helping them identify potential issues and opportunities to enhance their company's value.
Many negotiators under-value their position due to fear, but by adopting ambitious goals, they can achieve better outcomes in negotiations.
Creating a comprehensive negotiation package utilizing a two-by-two matrix allows for effective trade-offs while maintaining clarity and positive relationships.
Deep dives
Importance of Technical Due Diligence
Technical due diligence is identified as a crucial process for SaaS CEOs, particularly those who may lack technical backgrounds. This process helps evaluate the technical aspects of a company and ensures that potential issues and opportunities are identified early on. Engaging a specialized firm like Symfony can assist in executing these tasks effectively, as they offer a range of services including product development and quality assurance improvement. Recognizing the significance of this process can lead CEOs to make informed decisions that enhance their company's value.
Common Negotiation Mistakes
Many individuals, including both novice and expert negotiators, often under-negotiate due to fear of losing a deal or offending their counterpart. This fear leads them to leave valuable opportunities on the table by not pushing for enough issues during discussions. Instead, negotiators should aim to adopt a mindset that values ambitious goals, considering various factors and issues that affect both sides. By confronting their fears and recognizing their worth in negotiations, negotiators can unlock greater success and achieve better outcomes.
Understanding BATNA for Stronger Negotiation Power
The concept of BATNA, or Best Alternative to a Negotiated Agreement, is essential in negotiations as it provides a fallback option that strengthens one's position. Improving one's own BATNA can greatly enhance negotiation power, and it's equally important to assess the weaknesses in the counterpart's BATNA to set effective goals. By focusing on their own alternatives while analyzing the other party's weaknesses, negotiators can establish ambitious targets. This two-pronged approach encourages clearer thinking and fosters effective negotiation strategies.
Package Negotiation Strategies
In negotiations, it's essential to create a comprehensive package of offers rather than discussing issues piecemeal. A two-by-two matrix can help categorize the importance of various issues to both sides, enabling negotiators to focus on storytelling issues that matter to the other party while retaining contentious components. This method promotes flexibility and allows for negotiation of multiple elements simultaneously, increasing potential trade-offs. A well-structured negotiation package maintains clarity and effectiveness in achieving desired results.
Building Relationships While Negotiating
The dual aim in negotiations is to achieve optimal outcomes while maintaining positive relationships with counterparts. Strategies such as going first, focusing on the other party's needs, and framing offers to highlight the urgency of addressing concerns can contribute to nurturing ongoing relationships. Successful negotiators understand the importance of surrendering space for concessions, making the counterpart feel they have won in some aspects. By balancing the need for favorable terms with relationship-building efforts, negotiators can set the stage for future collaboration.
Understanding Generational Differences in Negotiation
Generational disparities can influence negotiating styles and preferences, particularly as younger entrepreneurs interact with seasoned counterparts. Younger negotiators might feel inclined to use digital communication methods rather than face-to-face discussions, which could undermine their effectiveness. Establishing urgency in negotiations can also differ across generations, with young negotiators needing to emphasize compelling reasons for action. By developing awareness of these generational factors, younger negotiators can adapt their strategies to align better with their more experienced interlocutors.
This episode is brought to you by Symphony. Symphony not only performs technical due diligence engagements for search funds, Private Equity firms, and strategic acquirers, but they also partner with those buyers on an ongoing basis on all things product (outsourced development, team augmentation, new product prototyping, UI refreshes, QA professionalization, and so on). Symphony is offering a full 15% off of any of their services for listeners of In the Trenches. Just go to the Contact form on their website and tell them that you’re a listener of the podcast to receive this discount!
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This episode is brought to you by Oberle Risk Strategies, the leading insurance brokerage and insurance diligence provider for the search fund community. The company is led by August Felker (himself a 2-time successful searcher), and has been trusted by search investors, lenders, searchers and CEOs for over a decade now. Their due diligence offering (which is 100% free of charge) will assess the pros and cons of your target company’s insurance program, including any potential coverage gaps, the pro-forma insurance pricing, and the program structure changes needed for closing. At or shortly after closing, they then execute on all of those findings on your behalf. Oberle has serviced over 900 customers across a decade of operation, including countless searchers and CEOs within the ETA community
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Today I'm joined by Dr. Victoria Medvec, a Professor of Management and Organizations at the Kellogg School of Management at Northwestern University. In addition to her professorship, Dr. Medvec is the CEO of Medvec and Associates, a consulting firm focused on high stakes negotiations and strategic decisions. She is also the author of the best-selling book, Negotiate Without Fear, which was published in 2021. Dr. Medvec is a renowned global expert in the areas of negotiations, often advising senior executives and Boards of Directors from companies around the world. Her clients include IBM, Cisco, McKesson, General Electric, Merck, McKinsey, BlackRock, Goldman Sachs, McDonalds, Bristol Myers Squibb, and J.P. Morgan Chase, to name just a few.
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