How to Eliminate Negotiations from your Business Life

Recently, I had a friend bring a business project to me that would require a significant investment. He had a great idea for a roll-up in the Real Estate industry, but needed a financial partner in order to accomplish his strategy. We spent some time working through the merits of his concept and it appeared to be solid. The strategy was one that I had some experience with. I also had access to investors who would want to participate with us-if all of the due diligence checked out.

After going through the initial diligence period, it was time for us to figure out how we were going to partner together on this venture. Who would be responsible for what roles? How would we divide equity and compensation in the deal? I will admit there is a lot that should be considered in these situations. But what is the right way to value all of this? There are so many potential approaches to solve for the desired end results.

I am pretty analytical when it comes to deal structuring. Whenever I get to this phase of an opportunity, my brain always starts going into overdrive. I assess (and often obsess on) what I think the right structure and terms should be. I want to pinpoint how to get the team on board with what I think is right.

All of my business career, I have negotiated in some form or another. Whether it is for a piece of property, an executive compensation plan for a key executive, or a large number of other matters, it seems that I regularly find myself in “negotiations.”

However, the last couple years, I have stopped negotiating all together. I have come to a new understanding of value creation that doesn’t require me to negotiate in order to protect my position or interests in a deal. This comes from a couple key beliefs that I have internalized in recent years:

  1. I am very confident in the value that my team creates when we partner with others. We seek to create as much value in a deal or business interaction as possible for the other people involved. We know the value that we create, and we only get involved when it is significant and accretive. The primary reason for partnership in business is for each partner to benefit from the added value of the other partner(s). Our team is always creating significant value for our partners. Because of that, we have confidence that we will have a position in the deal that is fair and valuable for ourselves as well.
  2. I want to learn early in a relationship, if a person meets the standard of who my team and I want to work with. In fact, most people don’t meet our standards for partnership, and we seek to disqualify them as quickly as possible.

This second belief shows that there are plenty of people who we don’t want to work with because our values aren’t aligned. We are completely fine not working with them. If someone is going to try to squeeze way too much out of a deal for themselves without valuing the other parties adequately, then we have no interest in working with them anyway. It is only a matter of time before people like this will be trying to negotiate strongly with us, and grab more than their fair share of the value in a project.

In other words, if people don’t recognize the value that our firm creates in a partnership, or they try to negotiate strongly or pay far less for the value that we have created in partnership, then we don’t want to work with them.

In Adam Grant’s book “Give and Take” he describes the business case behind working with givers vs. takers. Givers seek to add value and create a better situation for those around them. Takers try to extract value from everyone around them, and do not care about what value they create. They only care about what they can get for themselves.

Interestingly, Grant points out from many business case studies how living life in business as a giver actually leads to more abundance and success. Givers create more value than takers and they are rewarded for it.

The Solution

What if you added so much value to your business relationships that you no longer had to negotiate with people?  What if you built up a reputation where people always want you involved and engaged if you are available?  This is the new way of creating value and valuing people in business and it is very rewarding.  Long term relationships flourish here while short term gains at others expense are simply not tolerated.  But to operate from this paradigm, you may have to change. You may have to become the kind of person who is willing and able to add significant value to those around you.

Learn how to create compelling value for others. Understand how to walk away from those who do not share your values. Then you will be operating from a new paradigm where negotiation isn’t required for success.

Leave a Reply

Your email address will not be published. Required fields are marked *