Dealmaking for the long term

We can perhaps now hypothesise that overconfidence and greed played a large part in triggering the recent global financial crisis. One positive fallout seems to be the emergence of a sense of humility and recognition of the fact that the pursuit of immediate gain with no attention to the long-term consequences is a recipe for financial disaster.

Just as businesses need sustainable competitive advantages to survive and grow, any partnership, merger, business arrangement needs a sustainable relationship to thrive. Beyond Dealmaking provides an interesting perspective on relationship-centered negotiation as distinct from a transactional, deal–centered negotiation.

According to the author, moving the focus away from the deal to a relationship shifts the goal posts and ensures that both parties can work together in the future and prosper. In plain deal-making, the two parties simply leave everything to the contractual agreement. A deal is merely a promise; a relationship ensures the desired outcome.

The author points out that the need for fairness—which is hardwired into to our brains—is one of the cornerstones of negotiating a relationship. Fairness in the current context merely means being open, honest and reasonable; offering explanations, legitimacy and objective evidence; behaving in a way that is justifiable, and understanding your own value as well as the value that other parties bring to the table. It means considering the relationship over time, not just how much you can squeeze out of the immediate transaction.

But, in deal-centered negotiation, the quest for control takes the front seat and dominates the thinking of the negotiators. I liked the way the author has caricatured "bears" in negotiations as those who press for unjustified discounts, one-sided concessions or undue favours. The author cautions that giving in without reason to bears creates larger demands and damages the relationship on both sides. The author provides useful perspective on how to handle these bears and avoid creating mistrust.

The book introduces the concept of GRASP—goals, routes, arguments, substitutes, persuasion—or the five steps to negotiating relationships successfully. Goals establish what you and they really want and why. Routes are sets of terms or trade-offs that will achieve all or some of your objectives while also satisfying the other party. Arguments are compelling reasons backed by solid evidence.

The chapter on substitutes is insightful and brings out a very good perspective on the WAL (Walk Away Line). In any negotiation, it is important to have a substitute or back-up plan. The author provides good insight on building and knowing your WAL and on how to reveal a substitute to the counter party.

The author has tried to capture the spirit of a topic with concise but rather simple examples. While this underlines the easyto-read flow of the narrative, I think he could have put in more relevant examples of negotiations.

In this world where change is hitting us on a real-time basis in various forms, sustainable relationships will go a long way in achieving professional and personal happiness. Beyond Dealmaking arms you with the relevant tools to build these winning alliances.

— The reviewer is Director (Mergers & Acquisitions), Ambit Corporate Finance Pvt Ltd.