Negotiation in M&A transactions

The closing of an M&A transaction is subject to many factors, such as the effectiveness of the planning of the transaction’s structure and the intentions of the parties. Likewise, the negotiation processes and the people who lead them are essential for the success of mergers or acquisitions, since in the vast majority of cases conflicts and counterproposals arise, depending on their level and impact on each of the specific cases.

The agreements and decisions that are made in the negotiation period, even if the parties are on good terms and willing to discuss, are extremely important to achieve the closure of a transaction according to their own goals, whether in economic matters, time, or organization, among others.

Considering the above, it is natural that, in order to reach agreements that satisfy both parties, companies must have good negotiators, who inspire credibility and security in their requests and refusals, and that know to balance the art of persuasion with empathy regarding the needs and requests of the other party. It is impossible to successfully close an M&A transaction without being willing to defend and give in to issues that, although the ideal of a company would be otherwise, are necessary for the balance of the business. Likewise, another key point in the negotiation process is to identify the common interests of the other party, even when these are expressed in different ways.

Considering that the art of negotiating involves a deep capacity for analysis, a good negotiator must know the right moments to express his resignations, demands, and proposals. Impatience in this sense will only lead to the company being left, to its detriment, in an imbalance of agreements. It is important to know how to listen, discuss, analyze, and project into the future to fully exploit persuasion skills.

Finally, although naturally, the negotiation style depends to a large extent on the personality and skills of the negotiator himself/herself, it can be worked on and developed through tactics, such as research and knowledge.

When talking about research and knowledge, reference is not made solely to the other party in an M&A process, but also to that of the company itself. The urgency in time for the closing should not be an excuse for the lack of investigation. Information is power, including the own objectives and the situation of the counterparty (including opinions resulting from audit processes). Only by knowing the strengths and weaknesses, it is possible for negotiators to plan together with their own team´s proposals that are real and effective.


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