Bernhard Burgener knows a thing or two about negotiations.
The media entrepreneur and investor believes ego and intellect are the two largest obstacles to completing a successful business negotiation.
Lack of preparation comes in a close third. To be a successful dealmaker on any level, these three areas need to be addressed. Power struggles are not productive. Threats don’t close deals with finance investors.
Negotiating is an art form. Let’s look closely at how it’s done.
The Power-Struggle between Entrepreneurs and Investors according to Bernhard Burgener
On one side of the table, you have the entrepreneur. They are the idea people, the creators, the parents who don’t want to relinquish control over their child. Investors, the party on the other side, have the money, are accustomed to making decisions, and don’t want to prioritize creative ideals over returns. Immovable object, meet unstoppable force.
This conundrum is found across the board. Entrepreneurs and investors come from all backgrounds, not just the high-tech arena. Imagine a working-class inventor of a new toolbelt negotiating with a seasoned Wall Street millionaire. There’s very little common ground there. Meeting in the middle somewhere is where the challenge lies.
Bernhard Burgener, Chairman of Highlight Communications AG explains that the entrepreneur wants to grow his company. The finance investor wants to make a profit. That’s a great place to start. The two goals are in alignment. It’s the external details and personal differences that people get lost in. How do you put those aside? The key is to prioritize what’s important and leave personality issues outside the room.
Be Aware of Cultural Differences
We live in a global economy, one where the person on the other side of the negotiating table may come from another country, speak a different language, or have cultural behaviors that you need to be aware of. Do your homework. Is shaking hands acceptable? When closing a deal in America, that’s standard, but not in Japan or the Middle East.
Language is important, especially when communicating emotions like sarcasm or humor, says Burgener, the Swiss-born entrepreneur. Germans and Brazilians view life differently than Americans do. Your jokes may be lost on them. Stick to the facts and focus on the numbers. Math is universal. Margin is a globally accepted concept. Equity and dilution don’t need to be translated once you get to this stage.
That said, language barriers and a fear of offending the other party should not get in the way of disagreement. The word “no” is a powerful negotiating tool. According to former FBI hostage negotiator Chris Voss, the negotiation STARTS with a “NO”. If you push too hard, you can always back out of it. If you don’t push hard enough, you won’t achieve your objectives.
There’s a technique to doing this. Push hard, let them push back, and compromise somewhere closer to your side of the line. That’s a win, but the other party won’t feel like they lost. Do all this with the demeanor of a friend and concerned partner and everyone will leave the table with a positive feeling, ready to move forward on a mutually beneficial arrangement.
Negotiate Process Before Substance
Business negotiations require a battle plan. Never engage without first mapping out the negotiating space and objectives of the discussion. The space should be someplace you feel comfortable and put the other party at ease, without relinquishing control of the room. A negotiation at your office puts you in your favorite chair in command of the meeting.
Keeping the discussion on point is your next challenge. Mapping out the primary objectives of the negotiation and doing your homework on any potential objections will make the discussion go in the direction you want it to. That doesn’t mean you won’t face a few curveballs. Field those as well as you can, then go back to your objectives map to get things back on track.
Understand what motivates the other party in the negotiation. That should be a factor in creating your discussion map. Investors don’t care about your previous failures. They want to know why this project is worth their time and money. Small talk is for outside the meeting. Chat about your kids and your past life after they’ve signed the deal.
How Bernhard Burgener determines positioning
A negotiation is pointless without a fixed objective. It’s critical to enter the meeting with your position firmly entrenched in your mind on each point. You’ll be obliterated without that certainty. Allowing the negotiation to “go where it will” is not a sound business strategy. Know what you want, compromise if you need to, but know how and why you’re doing it.
For an entrepreneur, equity distribution and dilution are two areas where establishing positioning ahead of time is crucial. If you have partners or cofounders, agree on this before negotiating with an investor. Set hard boundaries on what’s acceptable and what’s not acceptable. Savvy investors appreciate and admire certainty.
What You Don’t Say Is Often More Powerful Than What You Do Say
There are many subtleties in a negotiation that are invisible. “Be candid and upfront about what you want, says Burgener, but you should also create the space for the other party to express themselves. Active listening, coupled with thoughtful silence in the right moments, is a powerful negotiating tool. Give them enough of both and they may change the deal in your favor”.
This is how you prevail in a negotiation. Know what motivates the other party. Understand the cultural differences of the parties in the room. Choose a space that you can control. Create a map of discussion points and stick to it as closely as possible. Push, but compromise when you need to. Listen and know when to be silent. Do all this and you’ll get the deal you want.
