In The Trenches: Conversation with Dr. Victoria Medvec

7:31PM Nov 6, 2023

Speakers:

Steve Divitkos

Victoria Medvec

Keywords:

negotiation

negotiating

steve

issues

alternatives

negotiate

offer

other side

options

deal

negotiators

weakness

other side's

build

buyer

business

ambitious goals

differentiators

work

team

Dr. Victoria Medvec, welcome to the show.

Thank you so much, Steve, it is a privilege to be with you today. Thank you for inviting me.

The privilege is mine, I read your book about a year ago. And for those who may be unfamiliar, the book is called Negotiate Without Fear, Strategies and Tools to Maximize your Outcomes. And I loved it. And that was naturally the catalyst for inviting you on the show today. And we have a lot to get to so actually want to dive right in. We're going to be structuring our conversation today basically, in two buckets. The first bucket that we're going to start with is basically, maybe I can loosely call it negotiating one on one, these are negotiation best practices. And then in the second half of our discussion, we'll discuss negotiations specific to mergers and acquisitions, which I know is something that you do a lot of work on, and something that is near and dear to the hearts of our listeners.

But before we get there, let's start with negotiating one on one. And where I want to start is with the following question. If I could magically randomly select 100 people negotiating 100 different things. I'm curious, which is the mistake that you think I would encounter more frequently, is it people under negotiating? So in other words, leaving opportunities on the table? Or is it people over negotiating? So in other words, they don't really know when to take a good offer that's in front of them, and they lose some goodwill with their counterpart? Which one do you think is the more frequent mistake? And why?

I love that question, Steve. And that question reveals that you have had a lot of experience in negotiating. So I am so excited to be on your podcast and talk to you and your audience about these challenges. You know, when I wrote Negotiate Without Fear, a part of what drove my desire to entitle it in that way, is because I actually think the answer to this is very simple. I think people often do not negotiate for enough. And the reason they don't is because of fear, they're afraid they'll lose the deal. They're afraid the other side will walk away. They're afraid they'll offend the other side. And that fear is pervasive. What's interesting about it, Steve, is the fear is pervasive in both amateur negotiators, and even expert negotiators.

What experts fear is often different, but they still have fear impeding their success. And so I think frequently, people under negotiate, they don't put enough issues on the table. They don't put the right issues on the table. They don't negotiate for an expansive enough package. And that all limits their success. So I would love to talk to you today about how to ensure people are negotiating the right issues and negotiating for enough in every one of their negotiations. Whether it is that one on one situation that you talked about, of negotiating for smaller things with customers, or suppliers or in our everyday life, or whether it's negotiating a big M&A deal, that is probably the biggest revenue generation opportunity that many founders will face, how do I ensure I negotiate the right deal?

So in my second year of business school, many moons ago, I took a negotiations class, I suspect many of our listeners have taken a negotiation class or seminar. And one of the things that I remember is this concept of BATNA, which stands for best alternative to a negotiated agreement. It's basically what's your plan B, or what's your other option. So one of the things that we learned and kind of the thing that I took from that class is, you either strengthen your own BATNA or you weaken your opponent's BATNA.

And if you can do neither of those, then you at least create the perception that yours is strong, and theirs is weak. And that all sounds very intuitive and logical. But like all good things, I suspect this is all much easier said than done. So I'm curious in a in a tactical way, what are some practical ways that you've seen others either strengthen their BATNA or weaken their opponent's BATNA or alternatively created the perception of either of those things being true?

So Steve, if you look at my book, Negotiate Without Fear, you'll find that I spend a lot of time talking about that now. And I actually like to separate the two that you just discussed. So I like to think about improving my own best outside alternative, improving my own BATNA improving my best outside option will actually be my strongest source of power in any negotiation. So I want to try to improve it as much as I can. And I spend a lot of time in the book talking about the importance of simultaneously building your BATNA rather than sequentially building your BATNA, that I want to build options all together when a build options upfront.

So for example, if I was selling my company, I wouldn't want to talk to the first strategic buyer and negotiate that and if I didn't like the deal, go find another buyer. I would rather They're find a bunch of alternatives generate options have options before I get into negotiating with any of them. building my BATNA is my biggest source of power. And building my BATNA will actually drive my bottom line, my reservation point. So I want to make my bat net as strong as possible before I negotiate. But I'd like to think about the weakness of the other side's BATNA for a very different purpose. And in fact, in my book, I talk about the weakness of their BATNA.

The weakness of the other side's BATNA, actually should be the source of my goal in the negotiation. So the weakness of their BATNA and the strength of my own BATNA don't correlate at all, they're totally different. And I'd like to think about them in very separate ways. So to think about the weakness of their BATNA, as what I focus on to develop my goal. And if you look in my book, you'll actually find that I have an entire chapter on analyzing the weakness of the other side's BATNA to determine your goal for the negotiation. And one of the things that I tell you in that chapter five in the book, is that most people don't establish very ambitious goals, because they don't think enough about the weakness of the other side's BATNA.

And so I actually give you in the book, some BATNA analysis tools that are designed explicitly to analyze the weakness of the other sides alternative and ensure that you're focused on that when you set your goal for the negotiation. So take a look in chapter five. And you'll see a lot of BATNA analysis tools, a bat analysis tool with the customer a BATNA analysis tool when I'm negotiating with the supplier, a BATNA analysis tool when I'm selling my company, a BATNA analysis tool. When I'm negotiating for myself, I always want to be focused on thinking through and evaluating and assessing the weakness of the other side's options, because that's going to drive my goal in the negotiation.

If you look in chapter three, you'll see that's a very different topic. That's about building my own BATNA. And my own BATNA drives my bottom line, my reservation point, what's talked about in chapter four. So it's very important, Steve, to do both. To build my own BATNA so that I strengthen my power. It's the biggest source of power I have, I want to strengthen it, and then that's going to drive my bottom line. But I also want to understand the weakness of the other side's BATNA, because that's going to drive my goal. And I want to remember when I negotiate that I never want to confuse or conflate my goal. And my reservation point, my goal is based on the weakness of the other side's BATNA, my reservation point, my bottom line is based on my BATNA.

I want to have a strong BATNA so that I have a more attractive bottom line. But I want to make certain that I'm not thinking about that when I set my goal. My goal should have nothing to do with my BATNA, nothing to do with my bottom line. My goal should be based on the weakness of the other side's BATNA. So I really encourage negotiators to think about both of those things separately, I think too often, we combine them. And we talk about a concept called leverage, Steve. And the problem with leverage is it's often conflating the two where I want you to separate them and think about them both individually. What is your goal, based on the weakness of the other side's BATNA? What is your bottom line based on your own BATNA?

I'll stop there, see, but I'm happy to get into that more and even give you an example if it's useful, because that distinction is essential goals drive outcomes, and one of the biggest limitations people have in negotiations is that they don't set ambitious goals. And a lot of times they don't set ambitious goals, because they're thinking about their own alternatives, rather than focusing on the weakness of the other side's alternatives.

Yeah, I mean, without kind of divulging too much of the secret sauce, if possible, I'd love if you could maybe give us an example of a BATNA analysis tool that we might be able to utilize to evaluate the strength of our counterparts BATNA.

And what I want you to focus on Steve, and it's such a good point, I want you to focus on the weakness of their BATNA, not the strength of it.

Yeah. The strength or lack thereof, I should say.

And the reason I make that distinction, I'm actually very worried that when you analyze the other side's BATNA, you might think, Oh, my gosh, I'm gonna get it wrong. And I like to make everybody comfortable and tell you, you will get it wrong. Like, let's just define that you won't know it for sure. You'll never know for certain what their BATNA is, but I'm only worried about a one sided error. I'm only worried that you might actually think they're BATNA is stronger than it actually is. Because if you think their BATNA is stronger than it actually is you're not going to set a very ambitious goal. And when you go in without a very ambitious goal, you're going to make an offer.

And you risk that the other side says, okay, have you ever had that happen Steve, you make an offer on the other side says sounds good? And you're like shit, I could have asked for more I could have done better. That's the mistake you can never recover from. So you can never recover from not being ambitious enough. So that's why I never tell you you're going to analyze their BATNA. I always say you're going to analyze the weakness of the other side's alternatives, because that's going to fixate you on the weakness of their options. If I go in, and I think their BATNA is weaker than it actually is, that's okay, I will have an ambitious goal, I will make an offer.

I will find out that it's too ambitious, I can adjust, I can modify, I can concede, I can easily recover from being too ambitious, I can never recover from not being ambitious enough. So the BATNA analysis tools that we list in the book are all designed to focus on the weakness of the other side's alternatives, and get you to fixate on that to set your goal. And the way they're set up. Steve is each one of them has 10 Questions. 10 Questions that are designed to think about the weakness of the other side's alternatives. So there's 10 questions to think about the weakness of a customer's alternatives. And there's 10 questions to think about the weakness of the suppliers alternatives.

And I also give you in the book, a section where if you're negotiating for yourself, there are 10 questions to think about the weakness of your employer's alternatives. So there are 10 questions. And they're always structured where a low number means the other side has weak options. And a high number means they have strong options. And so you answer the 10 questions, it takes two minutes to do it, you answer the 10 questions, and then think about adding those together and divided by 10, you have a score. If that score is a 1, 2, 3, 4, even a five, that means the other side has weak options. And I should have a super ambitious goal. What do I mean by that super ambitious? I should be going in there shooting for more than what I would typically shoot for in that kind of a negotiation.

So if I'm in a customer negotiation, I might shoot for a higher margin than is the norm. If I'm with the supplier, I might shoot for bet a higher amount of cost reduction than when I'm normally trying to get, I'm going to be ambitious, when that score is a 1, 2, 3, 4, 5. When it's a six or seven, I'm gonna go in there and shoot for what I typically try to get when it's an eight, nine or 10. I'm going to shoot for what I'm normally trying to get. But I know it's going to be hard. My concern, Steve, is that we always go in to negotiations. And we think about what are we typically trying to do? And then we think, oh my gosh, this one's going to be hard. But will we never analyze or those situations where the other side really has weak alternatives. And we should be more ambitious than normal. And that's what the BATNA analysis tool is designed to help you with.

So in our first question we asked, which is the more common mistake under negotiating or over negotiating your answer was pretty clear, and that we tend to under negotiate more frequently. Is it fair to say that, with respect to the second question, the mistake that is more likely is we are more likely to overestimate the strength of our counterparts BATNA?

I would say we're either likely to overestimate the strength of their BATNA seed, or literally, to not even think about that at all. And I would actually tell you that one of the traps that even expert negotiators run into is they don't set ambitious goals. And so I think that's the really foundational trap. We're not setting ambitious goals. And we're not setting ambitious goals, because we're not focused on the right thing. We're not focused on the weakness of their alternatives. We think instead about what do I need to get what do I have to have that's important to me, and we don't think about the weakness of their alternatives and use that to set goals. That is the biggest limit in negotiation, we don't set the right goals.

So what do you do when you find yourself thrust into a negotiation where you know with certainty that your BATNA is not very good? So when I was kind of thinking this question, you know, as a CEO, I remember far too many times, an employee would come into my office unexpectedly, they would ask for a raise or some sort of significant change, and maybe even indirectly threatened to move to a competitor if I didn't meet their needs. And in this case, it's in my own head, I'm thinking well, it would be very difficult to replace you, very expensive, very time consuming. Who knows if I even can? So I know my BATNA is not good. How do you make the best of a bad situation like that, where you just know your BATNA is not that great?

That's a great question. And Steve, you know, I know that a lot of your listeners might run some small and mid sized companies like I do. And so I remember being in exactly that situation that you were in Steve where someone wants to get more and you're like, oh, no, what would I do without them? Right? And my own BATNA is not that good. I want to recognize that clearly my BATNA matters. My BATNA is my biggest source of power. So having options and having alternatives strengthens my hand more than anything else I could do. So I always do want to have options and alternatives. This is a part of why I always say we should always be hiring like always be looking for talent, always know who else is out there.

Always know who would I hire, if not the team I have right now, because that does strengthen my BATNA. But I do want to suggested that even if I don't have a strong BATNA, it doesn't necessarily mean that the negotiation will not be good. Let me give you an example that I think really stresses the difference between my BATNA and the weakness of their BATNA. My best source of power versus my goal in the negotiation. So see, the example actually comes from one of my clients who owns a professional baseball team. And just because I want to make sure nobody's trying to guess who this is, I'm going to tell you right up front, it's not the Chicago Cubs. Nor is it the Chicago White Sox, that is in this example.

It is a professional baseball team in the United States, but a different city. So it's not either the ones you might suspect. So this owner of this team calls me up. And he tells me that he has to negotiate with the stadium where his team is playing. And he wants my help, because in his words, this is going to be a terrible negotiation. And I started by saying to him, this isn't going to be a terrible negotiation, you could move the team. He goes, I don't want to move the team. I said, No, I understand you don't really want to move the team. But I mean, you couldn't move the team. Other people have moved their teams, you could move the team. He goes Vicki, I don't want to move the team. I said, I understand. But there are stadiums that are available out there.

And we could go and visit some of those stadiums see what's out there, see where you might move the team. He goes Vicki I don't want to move the team. And I said, I get it. I mean, it probably seems very onerous and very difficult to move the team. I understand why you're concerned, maybe we could meet with some other owners who have moved their teams, because Vicki, I don't want to move the team. Okay, Steve, I have to be honest. I am a professional negotiator. I advise on deals all the time. I like to be a BATNA builder, I love to build the BATNA of my clients. This client did not want to have his BATNA generated, right, he was not interested in building is that need and want to generate his BATNA.

He didn't want to have any other options, it was very obvious to me, I always say, as a professional negotiator, you have to wear the BATNA generation badge, you have to recognize the importance of trying to build that because it's your biggest source of power. But he did not want to have his BATNA generated. So in this situation, I was advising him, and he had very weak, I'll try to see one of the keep the team where they were in that stadium. That's what he wanted. And I said to him, but you know, just because we are going to have limited options, does not mean this is going to be a terrible negotiation. He goes Vicki, I said, I don't want to move the team. And I said, I get it. I understand.

I said, but if you make me a promise, you will never ever say those words again, like never say those words, again, not to your business partner, not to your best friend, not to your wife, not to your mother, if you never, ever say those words again, this is not going to be a bad negotiation. But he goes Vicki I don't want, I said don't say it again, never ever say it again. I said I understand that we have limited options. And that means we don't have a particularly attractive bottom line. But that does not mean it's not going to be a great negotiation. Because in fact, it has no impact at all on our goal. And our goal for this negotiation is going to be based on the weakness of the other side's alternatives.

And as I'm thinking about that, I'm thinking that the stadium owner has pretty weak alternatives. And thinking about what does a stadium owner do? If they don't have a professional team playing in their state in this stadium owner owns a baseball stadium? So what are they going to do if they don't have a team playing on the field? I mean, I've got all this real estate and invested in all of this capital. I've got all these concessionaires that are inside with contracts with me, what am I going to do if I've got no team on the field? That feels like very weak alternatives? I mean, what are they going to do? Are they going to rent it out to Little League teams to play there on weekends? Are they going to hold flea markets there on Sundays?

I would say that stadium owner has very weak alternatives. And that we should have a super ambitious goal in this negotiation. We're just going to have a big spread between the goal that is based on the weakness of their alternatives. And the fact that we don't have a particularly strong bottom line because we don't have the strength of our alternatives. So we're gonna have a big range. We're gonna go in there with a super ambitious goal. And I said to the owner, and we are still going on my field trip. We're still gonna go look at all the empty stadiums so that you can see just how weak their alternatives are, I want you to feel really good about the super ambitious goal that we have that is based on the weakness of their options.

And I want you to see for yourself the weakness of those options. So it's a good example, Steve, of what to do, and I don't have a lot of power. I don't want to think about it lightly. I want to always try to build my BATNA. I'm a BATNA generator. I always go first to building my BATNA. But even if I don't have strong BATNA, I could still have this super ambitious goal. And I think that's a piece that gets lost when we think about leverage is we never think about the fact that although I don't have a strong BATNA, and I don't have strong options, and I don't have a great walk away, that I could still have a very ambitious goal, because my goal has nothing to do with my own walk away. It has nothing to do with my back. Now, my goal is entirely based on the weakness of their alternatives.

Right. So is it fair to say that, while you can't always necessarily strengthen your BATNA, you can always at least increase the perception of the strength of your BATNA and or kind of hone in on the weakness of the other side's?

So I think that that that is about perception and reality. I think you're absolutely right, Steve, that both affect the other side's view of my alternatives is what they perceive mild, tentative, sweet, and what my alternatives actually are. And in this example, clearly, Steve, I'm trying to build the perception of the alternatives, even with that tour. I mean, the reality is, I'm saying to that owner that that tour is to look at the weakness of the other side's options, but it's not going to hurt us to improve the perception that we're looking elsewhere. And remember, I also told him, he's not allowed to tell anybody ever, that we're not going to move the team. So clearly, I am trying to shape the perception of the other side's options.

I'm trying to shape the perception of their evaluation of our options, clearly. But I will tell you, I worry when people get too fixated on perception and don't build reality. Like I'm always worried when people are thinking about negotiating for a new job. And they'll say, I'm just going to tell them I have other offers. I think that's a terrible idea. I think you should go find other options and generate stronger BATNA. Because it is true that your power lies in the strength of your alternatives and the perception that exists of them. But you're in a much stronger position if you actually have strong other alternatives. So never discount the idea of building up your options.

So when you're engaging in a multivariable negotiation, so you're simultaneously negotiating many things at once, like an M&A transaction is a perfect example. Naturally, there are some issues that are important to both sides, there are some issues that are unimportant to both sides. And then there are some issues that are more important to one side than the other. I've read and heard you suggest that folks organize these issues into like a two by two matrix of sorts. My question is, like, in which quadrant do you suggest people start at the outset of negotiation? And why?

Great, I love how carefully you read my book, Steve, it really is awesome to hear that. I love that. So you're right, that in chapter two, I spend a lot of time talking about the issues you should put on the table. And I talk a lot about negotiating the right issues. You know, see, the reason I spend so much time on that in chapter two, is because expert negotiators will negotiate the wrong deal. Even people who negotiate every day often negotiate entirely the wrong package, because they negotiate what is standard, or what is typical, what always gets discussed, and they don't put the right issues on the table. So you're absolutely correct that I focus a lot of effort on putting the right issues on the table.

And I believe that the first thing you should do is think about your objectives. What are you trying to achieve both in the short term and in the long term with the other side, and your objectives will drive the negotiable issues. And one of my objectives is always to address the other side's pressing business needs. And a second objective is always to build the relationship with the other side and be very specific with whom in what timeline. And the third objective is always to differentiate myself, my product, my service, my offering, and then clearly a fourth objective is to maximize my outcomes. But in order to maximize my outcomes, I've got to focus on those first three objectives.

And those first three objectives are going to reduce what is a bias that is so problematic in negotiation. It's called the egocentric bias. I tend to walk around sort of thinking about myself and not focused on the other side. I was able to call All with a client this morning. And he said, my problem is my negotiators go in trying to sell the product we want to sell not solve the problem the other side has. And I think we can all relate to that. We have these egocentric negotiators that are thinking about themselves and not focused on the other side. So my first three objectives, to address their pressing business needs, build the relationship and differentiate are all designed to focus on them, not me.

And make certain that I'm putting the right issues on the table. Those issues that I generate, as you mentioned, will fall into a quadrant on my issue matrix. And my issue matrix is defined in chapter two in the book. And it's correctly a two by two, the X axis is about what's important to me, that horizontal axis is about what's important to me. The Y axis, that vertical axis is about what matters to the other side. And when we think about it, there's going to be a quadrant that is high on X and high on Y, it's very, very important to it's very, very important to me, those issues are called contentious issues. And they always exist in every negotiation, there will be something contentious like price, you're never going to get rid of it.

The key is, though, I don't want to only be focused on contentious issues. What I want to have more of than anything else, are what are the issues that I refer to as storytelling issues, they're high on Y, so they're very important to the other side, they're low on X. So they're easy for me to offer up and very important to the other side, every one of my differentiators will likely fall into the storytelling quadrant, a lot of my things I'm doing to build the relationship will fall into the storytelling quadrant. A lot of the things I'm offering to solve your problem will fit into the storytelling quadrant. I want to have more storytelling issues than anything else.

Because the storytelling issues provide the dry powder, the fodder that I'm going to use to get more of what I want on the contentious issues. And more of what I want on the trade off issues. Trade off issues are things that are really, really important to me and easier for the other side to offer up. So I want to fill up that storytelling quadrant and create a whole bunch of things that I can use to get more on this trade off issues and more on the contentious issues. Now, if you think about my logic, it's sort of addressing your question of what should go first, which is none of them, they should all be negotiated together as a full package, I want to negotiate at the package level.

Because if I negotiate issue by issue, that I will never have the ability to use the storytelling issues, to get what I want on the contentious and trade off issues, I get to keep all those things on the table altogether. So that I can use those storytelling issues to capture more on the contentious and trade off issues. Now, I'm not saying that nothing will be held out, I always say, Steve, that you should have a bucket of issues on the side. And the bucket of issues are used actually to close the deal. The easiest way for me to close the deal is to throw something new in. And I also need to throw something new in when the other side says Take it or leave it. That's my final offer. That's it. So if ever we're at an impasse, the best way to break an impasse is to add in a new issue.

So I always need a little bucket I was envision, it's a little tin bucket of issues on the side. But that tin bucket of issues that are held out are always storytelling issues. And I'm going to use them to throw in to reduce the tension to grease the way to bring down the temperature and to help if the other side says Take it or leave it. But let me be clear that initial package needs to include every storytelling issue that tells the story about how my differentiators address your pressing business need. And the initial package needs to include all contentious issues, and all trade off issues, because you're never going to bring down the temperature or reduce the contention by adding in another contentious thing.

So everything in the initial package are the storytelling issues that tell a story about how my differentiators addressed your need all of the contentious issues and all the trade off issues. They're all in that initial package. And I'm negotiating them as a package all together. I'm giving you offers that go across all the issues. I'm not settling a single issue one at a time.

Yeah, and in doing research for this conversation, I listened to you on another podcast and on that podcast. You mentioned how you really love the book Influenced by Robert Cialdini, and in that book, he introduces this concept of reciprocity, which basically refers to this idea that when you quote unquote give something to somebody, they subconsciously feel obligated to give you something in return. And I'm wondering when you are party to negotiation, how do you utilize this? I mean, is it as simple as, you know, early in the process conceding on an issue that's not particularly important to you, but important to your counterpart, in hopes that subconsciously that makes them more likely to concede on something that's important to you? I mean, do you think about it that mechanically, so how do you use that if at all?

Great. So Steve, one of the things I would say is I love Bob Cialdini's work, I think it's brilliant. And I think everyone should read his work on influence, because I think it's very powerful. And I do believe in reciprocity. But when I think about the concept of reciprocity, in a negotiation, I'm thinking about it as reciprocity, around information, not around settling issues. So I might provide a piece of information, and try to use that to get a piece of information back from you. But what I'm not going to do is to settle an issue, in your words in the hopes that they will give me something else, because two things. Number one, I don't believe that hope is a strategy.

So I never want to use hope as my strategy, I want to settle something at a package level, not issue by issue. And number two, I worry that if I settle something that is easy for me, I'm making a huge assumption that that is not very valuable to the other side. And it might be actually an incredibly valuable issue to the other side. Although it's easy for me to offer up and it's in that storytelling quadrant, it might be very high on that Y axis, it can be very, very important to them. And if I just gave it away upfront, I might hope that they would remember, but I think it would be easier if I held on to it and used it to get what I wanted on the other issue, rather than hoping that that would happen.

So I am very big on package deals, package deals, package deals, nothing gets settled until it's all settled, I want to settle it at the package level. I think when we settle things one by one, the negotiation takes longer. I think when we settle things one by one, the issue becomes more contentious. In our discussion, I think that we we settled by one by one, not only is it taking longer and becoming more contentious, but we actually are less likely to identify optimal trade offs. Because if I settle something for you, outside of the full package, I may have just given you something that was very important to you. And I could have extracted something that was very important to me. But if we go issue by issue, we'll never identify those optimal trade offs.

So I would argue, Steve, that when I go issue by issue, I sort of shrink the pie, we're negotiating for a total that is smaller than if I were to allow us to uncover differences in our preferences and expand that pie, where you could get something very important too. And in return, I would exchange that for something that I really cared about. So I would like to think about that issue matrix, I always lay out my issues on an issue matrix. And so I would definitely recommend to your listeners that they look at the book, Look in chapter to see that issue matrix and use it. I'm always thinking about that when I'm negotiating, I'm always thinking about optimizing the trade offs, by giving them something more in the storytelling quadrant, to get more of something I want in a contentious or trade off quadrant.

And give them a storytelling issue to get more on a contentious or trade off issue. And I'm also thinking about the contentious and trade off issues. Both of them are really, really important to me, but trade off issues are easier for the other side to offer up. So I'm often trying to capture more in the trade off quadrant, if I have to give up something in the contentious quadrant. So I'm literally constantly thinking about the trade offs and optimizing the size of the deal. And I always have that visual in my mind as I'm negotiating.

So from a tactical standpoint, there's a few strategies that I found to be particularly interesting, these are three things that you advocate for, one going first, two, leaving yourself room to concede and three, making multiple offers simultaneously. So I know that that there's a lot of meat on that bone. So as best as you can, if you could quickly summarize like, what do each of these three things mean, and why do you think they're important?

So that was a great summary of information that comes in chapter six, information that comes in chapter seven, and information in chapter nine. So I absolutely think you're covering three big chapters there. Those are really meaty topics, as you said, Steve, so let's talk about what chapter six says first. Chapter Six says, I want to make the first offer. People who make first offers get better outcomes than people who follow when I lead when I start the negotiation. I get four big advantages. I get an anchoring advantage people get anchored by numbers, they get anchored by ideas, and they insufficiently adjust away from those, I get all of that starting point advantage when I lead.

When I lead, I also get to set the table with the right issues. If I came in, and I was negotiating with you and your my customer, Steve, and I said to you, so what are you looking for, and you said, I would like to get a cut price reduction from last year's contract, then you just set the table with the single issue of price. And all we're talking about is am I going to reduce it or not? If I came in, and I led seed, I might set the table with more issues and frame the discussion in a different way, I might say, you know, one thing we learned is through the pandemic, our supply chains were really challenged, you know, we had no breaks in our supply chain with you during the pandemic.

But I know you had breaks from a lot of your other suppliers. And I really feel like as we're moving into this next contract, we should be very focused on how we can reduce the risk in your supply chain. I want to ensure that we are increasing the security of your supply chain reducing your risk. And you know, we are a US manufacturer, and we have four plants across the US. So we could reduce the risk in your supply chain by shipping only from US facilities, we could reduce the risk of your supply chain by producing in one of our plants, two of our plants, three of our plants or even all four of our plants. I want to talk about how much redundancy we'd like in your production.

And you know, we could also reduce your risk by doing some hold back of some stock. And again, I could hold back stock in one of our locations, or three of our locations or all four of our locations, to ensure that you never have a break in the security of your supply chain. I know that when you had those breaks from other suppliers, you lost customers in the midst of a pandemic, I don't want that to ever happen to you again. So I want to talk about next year's contract, I've got a few options on how we could do this to make certain that we're reducing the risk of the security of your supply chain. If I go first feet, I get the advantage of framing the conversation and putting the right issues on the table, I also get the advantage of anchoring.

So anchoring, setting the table with the right issues, framing the discussion, those are three big advantages of leading. And the fourth advantage of leading is when I go first, I'm actually in the relationship enhancing position. If I let you lead, I'm actually in the relationship damaging position that is so counterintuitive. People always think I'm going to damage the relationship by leading, that is totally not true. When I lead, I get to put my offer out there, build the frame, create the anchor, and you tell me what you don't like about that offer, you tell me what's wrong, you critique my offer, you criticize my offer. And I get to be the first one that can see, if I let you go first, I have to particularly criticize your offer.

I don't want to start by critiquing you or criticizing you, I want to start by putting that offer out there, putting the right issues on the table, building the frame, anchoring the starting point and letting you react. And then I'll be the first one that can see. So that's all covered in chapter 16, which says, make the first offer. There are lots of books written that say He who speaks first loses. Those books are based on no research. The research on this is abundantly clear. People who make first offers get better outcomes than people who follow you want to leave, but you want to lead with the right offer. And that's why in chapter seven, I talked about leading with three options rather than one.

Leading with something I call multiple equivalent simultaneous offers, leading with three options on the table all at the same time. We could talk a lot more about that strategy, Steve. But when I lead and I lead with three options, I'm able to start at a more advantageous starting point, while looking flexible and cooperative to the other side. So I get all the advantage of leading, but I look flexible and I look cooperative, and I look like I want to build the relationship. I look like I'm working with you. So I want to lead but lead with three. And you miss the one point that's in chapter eight, which is I also want to lead in the right channel. And so I'm gonna lead in a synchronous channel.

And I always say say it don't send it and see them when you say it. I want to lead face to face looking you in the eye whether I'm sitting in a room with you or whether I'm on my favorite virtual format, whether that is teams or WebEx or Google meet or Zoom I'm going to be on some virtual channel. Looking you in the eye with our video on so I can see you so say it don't send it see them when you say it. And as you said, make certain that when I start with my multiple offers, I leave myself room to concede off of those starting points. I always want to concede, because when I concede you think you're winning, like if I make concessions, you're happier with the deal.

So I can get more, and you will be happier if I leave myself room to concede. So I'm happy to dig into any of those more seat. But I think you're right, I want to go first, I want to go first, with three options, I want to say don't send it. And I want to make certain I have room to concede.

Another thing that I found super interesting was when you said that when you're negotiating something, if you want to basically maintain something resembling the status quo, to highlight gains in your offer. But if you want to change the status quo in some way, then you should highlight losses in your offer. Can you just tell us a bit more about this and why you think this is important?

Yes. So this is all covered in chapter six in my book, when I talk about a compelling message, and you picked up on something that in my mind, Steve is probably one of the most important points in the book is what message do I convey when I give you my offer? So I am a big fan of research that was done by Danny Kahneman and Amos Tversky, in 1978. And that research was that was creating Prospect Theory is something that is, I think, probably the most important theory to understand human behavior, Prospect Theory. And what Prospect Theory says is that people are risk averse in the domain of gains, and that they're risk seeking in the domain of losses.

When you think about gains, we like gains, we like the certainty of our gains. And when I'm picking, I would choose a certain gain over the risky chance of a bigger gain. But I don't like losses, and I don't like to have losses. And in the domain of losses, I will be risk seeking, I would prefer to take a risk of losing by more rather than taking a certain loss. So this work was done in psychology in 1978. But I would argue it's a big reason why Danny Kahneman won the Nobel Prize in Economics in early 2000. Because I think it is such a pivotal, huge piece that drives human behavior. It shapes trading behavior, it shapes purchasing behavior, it shapes all kinds of behavior.

This idea that people are risk averse in the domain of gains, and risk seeking in the domain of losses. And so when I translate that into the world of negotiation, I think what we want to think about is we're risk averse in gains, we're risk seeking and losses. Let me give you an analogy. So you can just remember it, Steve, think about yesterday, I was watching the Premier League on Sunday morning, I got home from church, and my husband always is watching the Premier League on Sunday mornings. So we're watching the soccer match, and the team was up by one, and there was one minute left in the match. So the team is up by one, there's one minute left in the match.

And the coach of the team that was down by one, there losing by one with one minute left, the coach pulled the goalie and of course, the coach pulled the goalie because when I'm down by one with one minute left, my entire focus is let's take a risk, I'd rather lose by more than lose for sure. I'm going to pull the goalie push everybody up, everybody go on the attack, I'm going to try to score when I'm down by one with one minute left, losing, I'm going to be risk seeking. If I were up by one with one minute left, there's no way I would pull my goal, right, I'm risk averse, I'm gonna protect my goal, I'm gonna go all out to protect the goal.

And so one of the things you want to see is people are risk averse in gains, and risk seeking in losses. And when I want to translate that from the soccer pitch into the negotiation table, I want to think about this idea of what am I trying to get the other side to do? Am I trying to get them to maintain the status quo and do what they're currently doing? Or am I trying to get them to move off the status quo, do something new, do something different make a change? And Steve, one thing I would say is, I think when we're negotiating, we're almost always trying to move them off the status quo. We're trying to get them to buy more. We're trying to get them to pay more.

We're trying to get them to buy additional things. We're trying to get them to work with us rather than somebody else. We're trying to get them to sell their company, we're trying to get them to buy my company. In negotiation, when we are negotiating, we are almost always trying to move the other side off the status quo. And so to do that, we have to make them risk seeking which means we want to highlight loss, not gain. A mantra I always keep in my mind, Steve is highlight gain to maintain the status quo. Oh highlight last remove off, highlight gain to maintain loss to move off and in negotiation are almost always trying to get the other side to move off the status quo.

And so what I want to highlight is loss, not gain. So when I want to maintain the status quo, I use gain words. Gain words or words like benefit, advantage, increase, enhance improve savings, loss words or words like competitive threat, risk analysts giving you pressure, pressure on your share price, competitors eating your lunch competitors stealing your business, right? When I want to move you off the status quo, I'm going to highlight loss. So I'm going to tend to use money more loss words in my framing of my message. And when I am maintaining the status quo, it's normally not in the negotiation. It's kind of between negotiations.

And when I have you as my customer and I will talk every day about the revenue I provided the benefits I offered, which which one of the benefits did you value the most, I had like gain all the time between negotiations to make the other side kind of risk averse and wanting to just stay with me. But when I'm trying to get someone to move to do something new, to do something different. I'm gonna highlight loss not gain.

So good. So interesting. So interesting. Another frequent negotiating mistake that you cite, is people tend to revert to the way that things are always done as opposed to thinking outside of the proverbial box. Are you able to just maybe tell us a story or give us an example of a time where somebody offered something completely outside of the box in a particularly effective way?

So I think that what you're picking up on is something I talk a lot about in the book, which are the traps that expert negotiators encounter. And so I want to use an expert example of this, because I want to, I know that your listeners often have a lot of experience negotiating. But I want experts to recognize that even if I negotiate all the time, I frequently negotiate the wrong deal. And so I'm going to give you two examples of that one on terms of the issues we put on the table and the second one in terms of the goal we establish. So let's talk about the first one, do I put the right issues on the table?

You know, a lot of times experts will negotiate what is standard what is typical, what always gets discussed, and they don't think through all of their objectives. And they'll often miss objectives like differentiating myself or they'll miss an objective like focusing on the other side's problems, or they'll miss an objective like building the relationship and increasing my penetration into their C suite of their company. So a good example of that is I work with a lot of consulting firms and consulting firms will often go into a client negotiation and they'll negotiate fees, scope and staffing. And so they will talk about the client's pressing business seats and they will talk about their differentiators but when it comes to the negotiation itself.

All they're talking about is fee scope and staffing. And I would argue if that's all they're talking about, they've totally missed the ability to showcase their differentiators show how their differentiators are allowing them to be uniquely positioned to address the client's pressing business needs. And they're not having the right negotiation at all. And then if they were negotiating more around some of their differentiators and the client's needs, and they were varying those across their three options, they would have a much richer conversation that would reveal how they are uniquely positioned to address the needs of the other side. And they would be much more successful in that negotiation.

So that would be one example of your thinking in the box of fee scope and staffing. But if you're thinking outside the box, you would negotiate around a whole bunch of your differentiators, move your differentiated around and your multiple offers, vary what you're offering across them, put a bet on performance in one of your three options, showcase how confident you are that you can solve the client's problem. And you would end up with a very different conversation with the other side. So that's one example. A second example though, sort of thinking inside the box versus out of the boxes. You know, one of the things we often think about is what do we typically get what do we normally get?

What's the normal outcome? And I was working with the CEO, who was leading a publicly traded company. So the company had had a share. I had a deal that was being negotiated with an Asian buyer and the Asian buyer, the price was already established, but what we were working on was the negotiation of the contracts to keep the key employees. And I'll never forget this because I was traveling with my son. We were actually looking at colleges and I was out on this college trip. And I get a call from the CEO. And the CEO says, I talked to the employment attorney Vicki and he says what you're thinking that we should ask for is ridiculous and totally out of the blind and completely absurd.

And we can't ask for that much. And I said to him, you know, why don't we get together with the employment attorney. And I got on the call with the employment attorney, the employment attorney said, Vicki in these kinds of situations, this is the standard of what you would ask for, for the retention packages, this is normal, what you're asking for is completely outside of the norm. Totally outside of what you would expect. And I said, I hear you. And I know, you know a lot about what is typically asked for, and what would normally be asked for in this situation. But when I think about this situation, I don't think what is normally asked for is appropriate for a few reasons.

Number one, when the transaction was announced, the buyer talked about some very aggressive targets. And they said that they would see these kinds of synergies, they would take out these costs, they would hit these metrics. And they announced that they would do that in a really quick period of time. And so what is obvious is they have to keep this team in place. I said, and you know, the reality is, no one is irreplaceable, you can always replace a team. But I think it'd be very challenging for the buyer to replace this particular team, because they have some very unique skills, I said. And I think it would be nearly impossible for them to replace this team in the amount of time that they would have to replace them in order to achieve the metrics that they laid out by the timeline that they expressed.

So feels to me like they really really need to keep this team in place. And that if they don't keep this team in place, they will not achieve the metrics that they announced by the timeline that they expressed. And that that will affect their share price. So feels to me, like what is normal. And what is typical, is not relevant here. Because what they do is they need to keep this team in place. And in order to keep this team in place, the CEO has to be able to offer this team a really outstanding package. And that's how I think about our goal here is not what is normal, not what is typical, what do you normally get, that's not relevant. It's all about the weakness of the other side's alternatives.

And thinking about that, thinking outside the box, thinking about the weakness of their options to set your goal. So I will tell you that the CEO listened and set a very ambitious goal, went in and negotiated that retention package and got, you know, kind of one of the best retention packages ever negotiated. That gets discussed, it was a great package that allowed them to keep the team in place, the team stayed in place, the company was incredibly successful, the buyer got all of their metrics achieved in the timeline they wanted. And so the buyer would say that was a good outcome as well. But what I was most impressed by, I have to say, was that the employment attorney called me up afterwards.

And this employment attorney is a famous employment attorney who does a lot of deals. And he said, You know what the key, I think you were right, we did need to think outside the box. And I really appreciate you pushing back on me to think about the weakness of the other side's alternatives. Rather than thinking about what do we normally get, what do we typically get what is standard? And I think that is the logic, I would say, Steve, it's not that you just think outside the box to put the right issues on the table. You just have to think outside the box to set ambitious goals. And I would encourage people to do both.

It's a perfect segue into bucket of question number two, which revolve all around mergers and acquisitions, something that I know is near and dear to your own heart, as well as near and dear to the hearts of those listening. You advised both sellers and buyers across a countless number of transactions. I'm curious if you kind of zoom out from your experience. Are there any particularly contentious or difficult or emotional negotiating points that seem to recur over and over again in an M&A context?

Oh, so many. I'm so you're right, Steve. I do work with both sellers and buyers. But I would say if I were to divide it, I work a lot more on the selling side than the buying side. And when I'm working with a seller, I'm always fixating them on how do your unique differentiators address the buyers pressing business needs. Now you and I both know that we would divide buyers into strategic buyers and financial buyers. And I think it's easier to highlight how your unique differentiators addressed the buyers pressing business needs when the buyer is strategic, but I want people to make certain that they don't rule out private equity and think that private equity is just a financial buyer.

Because I see a lot of private equity deals today that are done particularly by small cap and mid cap, as put together by private equity firms focused on small cap and mid cap. A lot of them are strategic buyers. They're trying to buy a number of businesses in a particular sector and then roll them up together. So I do think that it's easier to highlight how your differentiator is addressed the other side's pressing business needs when it's a strategic buyer. But that strategic buyer could include companies and industries that are buying your business to do something with it, or private equity who's trying to do something in a particular sector or roll up a bunch of things.

So in those cases, I do see sellers make one very common mistake. And I would say that the biggest contention occurs around a dispute about the valuation of the company. And I would argue that I tell my clients that I want to focus a whole bunch less on the valuation of your business and a whole bunch more on the value of your business to the other side. And I think that's a big difference Steve. So I always tell my clients, we are never going to talk about a multiple times EBITDA. Because the multiple times EBITDA is a buyers rationale. So a lot of sellers rationale, a buyer is going to focus on the multiple times EBITDA, to try to pull down the valuation, the seller should never think about a multiple times EBITDA.

Because a multiple times EBITDA suggests that the buyer is going to buy your company and do with it exactly what you do right now. And that's not at all the case, the value to them is about what will your company do for them. And it's probably going to solve some problem for them or help them to move into some new market or give them a bigger channel to distribute through the value to them is totally different than the value of the business to you. So I always encourage people to think about what is the other side going to do with your company? What is the weakness of their alternative to do that in some other way, and to fixate on the weaknesses of their alternatives, as you set your goal for that negotiation, and try to move away from any kind of standard focus on a multiple times EBITDA.

Now, deal fatigue is a very real thing in M&A transactions. So much so that deals sometimes fall apart entirely because of it. And for those who are unaware, this basically refers to a situation where buyer's or seller's become so exhausted with the process that they just choose to back out of it altogether. So in one of these negotiations that's been prolonged, are there any signs that we should look out for in our counterparts to suggest that they might be at a tipping point with respect to deal fatigue, and that we better wrap it up otherwise, the transaction itself will soon be at risk?

So I absolutely think you have to consider deal fatigue. And I would say, I consider it from the moment when I'm preparing before I even begin all the way through to the moment I get a signed contract from the other side. So let's talk about deal fatigue, and how I deal with it at different stages in the negotiation. So the first thing I would say, is, I think deal fatigue is far more likely to happen sooner, if I'm negotiating issue by issue than if I'm giving you three options of three different packages. So you know, Steve, I told you that there are tons of problems with going issue by issue, it takes longer becomes more contentious, you're more likely to have an impasse.

And even if you get an agreement, it's more likely to be a sub optimal agreement. So I could tell you that there's reasons to put a package on the table. But a lot of people fall into a trap of going issue by issue. And the best way to avoid that trap is to go with three options. Because three offers simultaneously delivered, we'll keep it at the package level, if I go in with just one offer, it's very likely will end up talking about a single issue, because negotiations kind of devolve down the level. But if I come in with three options, it's much more likely I can keep you focused on a package alternative of one of those options or some revision of those options and at the package level.

So you number one, want to make certain to reduce deal fatigue, that you're going to the table, you're leading, and you're leading with three options. That's like a very critical starting point, to reduce deal fatigue. The second thing that I want to recognize is that I could use deal fatigue to my advantage. So one thing I always say is when I'm going back and forth, remember say it, don't send it. See them when I say it, I'm in front of them, and I'm negotiating. But one of the places where you often see deal fatigue happen is when you're kind of like going back and forth at the end are the T's and C's and the lawyers are involved. And everybody's like looking at the agreement.

And I always say at that stage in the negotiation, I would still prefer to be in front of the other side seeing them, not just saying it, and seeing them when I say it, I would really prefer to not be exchanging paper back and forth. But if we're ever, ever, ever going to exchange any paper back and forth at the very end, when we're like finalizing the T's and C's in the lines of the contract, I will always make changes, and make changes that you can see Steve. I'm never ever trying to deceive you or trick you, I will make changes and I will track changes. And I will show you what I've changed. But I will also always, and I always do this, I will always accept all changes.

And with the tracked change document, I will also send you a clean copy that is black and white and signed. And what I'm leveraging Steve is the fact that you might feel deal fatigue and be tired and like you're just going to be finished. And so I'm using it to my advantage a little bit by sending you that signed final agreement. Now I can do that, because I am a CEO of my company, and I own it and I can sign it. If you are in a very large company, it's much harder to sign that final agreement, but I would still send it with a black copy with all except all changes accepted. Because what that communicates to the other side, Steve is, can I look at Section 3.2A?

Yes, I could. But when I look at 3.2, I'm going to look at it in light of everything else. And if you just have a red line version, what people often perceive is that what's in red is still being negotiated. But everything in black is settled. And I want to say no, it's a package deal, nothing is settled until it's all settled. And if we're going to change point 3.2A, we might have to change something else. So always kind of think about that package deal, package deal, package deal. Start with the big package, go through the negotiation, always with a package on the table. And then the final thing I would say about deal fatigue, is you do have to recognize that it's important to land the plane.

So you know, I always say to people, everybody pays a price for certainty. And then I just have to think about what is the price I pay for certainty. And you know, Steve, because you do a lot of deals with people, some people pay a huge price for certainty, like they want to take the other first off, because they don't want to at all risk it, they're paying a very high price for certainty. And some people like to pay a very low price for certainty. So they want to like keep pushing at the edge, try to tweak out an ink out every little bit that they can possibly get. And I'm fine with that, except I do say to my clients all the time, we have to land the plane.

When you're reading the signal from the other side, that thinks that you have a good deal on the table and you're reading the signal that things could go badly, you want to land the plane. And so I will frequently say to my clients, you know, the wings are out, the landing gear is down, land the plane today. Land the plane, we are in amazing shape right here, land and finish it, close it. And that's when I want to bring out my closing tactics, and pull out that bucket of issues, I have to close it. And I'm probably going to pull out some concession I'll make to get it over the line and finish it and close the deal.

I spent a lot of time on closing the deal in chapter nine in my book. And I think that's because people often don't think about finishing. They think about starting well, they think about negotiating well, but they don't think about getting it closed and over the line and finished. And I think it's very important that you have a plan to concede your bucket issues, you know how you're going to throw them in, you know how you're going to get over the line and finish it. Because I think it's very dangerous to hover with my landing gear down and not close it and not get it landed. And I have seen deals disappear. I have a client who is literally one of the best negotiators I've ever worked with Steve.

He's an amazing negotiator. He's incredibly talented. And he is super aggressive. And I would argue he likes to pay a very low price for certainty, right? He has no concern about trying to squeeze it out, eke it out, get the very, very, very most out of the end of the deal. And I love that about working with him. Except I was doing a deal with him. And we were at a very strong point. And I said we need to close this today. I said this deal is big. There are lots of moving pieces. Something could change in the environment that would destroy this. If somebody else found out about this, it could change the environment. There's too many people involved. I think it's too risky to keep going let's close it today. Let's close let's let's land the plane today.

And he kept pushing and he didn't close it that day, Steve, and that weekend, exactly what I feared happened and the regulatory environment changed. There was a slight change in what regulators were asking for. It just dried the entire deal, the entire deal fell apart. And so I always say like, it's important to know when you're like close to the end, and you got to get over the finish line and close it, always know when that point is. And like just have a sense of an approach to closing. Think about your concession plan, think about your bucket issues and get it over the line and close it. When the landing gear is down, you got to land the plane.

So in the types of transactions that I am involved with both firsthand, as well as now on a more of a second hand basis as an investor, they are ones where the two counterparts to negotiation must then work very closely together after the conclusion of the negotiation. And to be more specific, we have buyers of businesses negotiating with sellers of businesses. But once the deal is complete, it's not like the seller disappears off to the beach, the seller and the buyer work very, very closely together. So there tends to be a bit of a push and pull with respect to getting as much as you can out of the negotiation and trying to manage a very tense, emotional, difficult, fatiguing process.

But on the other hand, the importance of maintaining constructive and positive relationships such that once the negotiation is over, and you need that person's help, you still want them to like you. What are some best practices related to maintaining a positive relationship with your counterpart, even in the midst of a very complicated and intense emotional negotiation?

So Steve, you've said so much in that statement, I want to unpack some of those ideas. So the first thing I would say is that, I think in almost every negotiation, I want to simultaneously build the relationship and optimize my outcome at the same time. You know, there are clearly one shot deals that exist. And I don't know about you, Steve, I'm a professional negotiator. And you are too. I bet you love one shot deals like buying a house or buying a car. And in those negotiations, there are hundreds of things I can do in the deal if I want to optimize my outcome, and I don't care what you think about me at the end of the negotiation, right.

And I mean, we do those things in one shot deals, right, the last time I bought a car in my family, Steve, I bought my midlife crisis car. It's a very practical car, it has two seats. I have four people in my family. It's a convertible, but I live in Chicago, it can't drive on any bad weather at all. And as I said, I live in Chicago and Jackson Hole, Wyoming. So it's a super practical car. But it made me feel younger when I bought it. So I really loved it. And I negotiated so hard on that car, I bought it with a great deal. But in the end, my husband actually refused to go with me to pick up the keys for the car because he was so mortified by my behavior, they didn't want to be seen in front of me in the car dealership.

So you can do that in one shot deals. But as you said, Steve, almost every one of those transactions that you're working on, and I would argue almost every deal in business is not a one shot deal. I care about the relationship with the other side, I'm going to have to work with them, they might be an ongoing customer, they might be an ongoing supplier, or as you said, in your transactions, they're actually the buyer of the business that now I will partner with to drive this business forward as the seller, I'm staying involved in some way. So I've got to build the relationship and optimize my outcome at the same time.

And when you look at the book, my book, Negotiate Without Fear, is really focused on strategies to simultaneously build the relationship and optimize your outcome. And so I really think hard throughout the entire book about ways to build the relationship and optimize my outcome at the same time. And if you think about it, that comes from putting the right issues on the table, setting ambitious goal. You know, sometimes people think I don't want to have an ambitious goal, because I'm gonna have good relationship, the reality is, you're far more likely to end up with a good relationship if you start more ambitious and leave yourself room to concede, then if you start too close to your own bottom line and have no room to maneuver, and no room to adjust.

So all the strategies we've been talking about throughout this discussion, today's deep focus on ways to build the relationship and optimize my outcome at the same time. But there's one set of strategies I would sort of say at the table that I think about, and they're really outlined in chapter 10. In my book, which is what I call the five F's to negotiation, the five things to think about when I'm at the table. And when I'm at the table, I'm going to think about going first, focusing on them, framing my offer correctly, being flexible. And I'm going to remember no feeble offers, let me talk about those five.

Because I think those five lead to the sixth F, which is being fearless, which is the goal in negotiation. I want you to be a fearless competent negotiator. So let's talk through the five steps. I want to go first. I absolutely want to create the starting offer because when I go first I can anchor the negotiation. I can put the right issues on the table, I can frame the discussion. And I'm in the relationship enhancing position. So with my goal of having a better long term relationship, I absolutely want to lead. I want to lead, I want to go in there with three offers, with lots and lots of issues on the table, all my offers are going to communicate a message about how my I am uniquely positioned to address your pressing business need and solve your problem.

That's what my offers are going to focus on. But I'm going to go first, I'm gonna go first. I'm going to focus on them, my offers are going to focus on addressing their needs solving their problems. I am never going to talk about what I want, what I need, what I have to get, I'm never going to talk about myself. I tell people to be pronoun checkers, when they negotiate to make sure they're focused on the other side, not yourself. If I'm talking about I, me, we, us, I'm talking about the wrong side, I want to focus on them their problem, their need, their challenge. I would say your first sentence in any negotiation should not have your own name in it or your side. And it's all about them.

And I often say the first slide in your deck, your name should not be anywhere on that slide unless it's in the header or the footer to show that it's your slide. But your name is not on that slide, your story is not about you, it's all about them. Be a pronoun checker, watch your first sentence, make sure your deck focuses on the other side from the very start. So keep it focused on them. Frame your offer correctly. One of the things that I think is key is to focus on them, and how your differentiators will solve a problem they have, address a challenge they have, you're noticing as I'm framing it Steve, that I'm highlighting loss, not gain. And that's because in transactions, I want the other side to do the deal, right, and I want them to do it Now.

I want to create urgency. You know, loss creates a much higher sense of urgency than gain does. If I highlight the benefits I can bring to you the advantages I can offer, you might be thinking I'll do a deal with you some day, I don't want you to be thinking some day, I want you to be thinking now, like do this now. And so I'm going to highlight loss to create urgency. So I'm going to go first, I'm going to focus on them. I'm going to frame the offer correctly, and I'm going to be flexible. I'm going to come in and give you three options, I'm always going to come in with three options in every single transaction I would ever do, I would lead with three options, not one.

When I come in with three offers, I get a stronger starting point advantage, I gain more information about what's important to you, I can literally ask for more than I could ever ask for with a single offer. And when I ask for more, you will actually find my offers to be more sincere, you'll think I'm more flexible, you're thicker, more cooperative, you think I'm more interested in working with you. And in addition to that, you are far more likely to engage in talking about my three offers. And you're less likely to make an aggressive counteroffer. So when I come in, and I give you three options, I will get better outcomes. But you will like me better, you'll think I'm more flexible, you think I'm more cooperative, you'll be more interested in working with me in the future.

So going back to that goal of great outcome, great relationship, I want to lead and claim that relationship enhancing role. I want to focus on them. And my entire offer focuses on that. I'm going to frame it correctly. And I'm going to use multiple offers, because that allows me to get more and build the relationship at the same time. But in the spirit of being flexible, I'm also going to leave myself room to concede. When I concede, you think you're getting a better deal, you are happier. Do you know Steve, people are happier if they pay more and saw you concede then if they pay less with no concessions. People like to see you concede.

So you want to let them see you can see. So go first focus on them. Frame it correctly, be flexible. Use multiple offers, leave yourself room to concede. And the final one is no feeble offers. I think too often Steve, we make feeble offers, like we're in a department store and we see a shirt and the shirt has a snag in it and we go up and we say could you take something off? That was feeble? I should have made a clear specific ask. I might have said you selling commission don't you? I feel bad. This shirt has a snag. Gosh, I'd be willing to take it off your hands if you gave me a 30% discount or if I bought this and this I would take them both with a 40% discount on both of them. Go first, focus on them, frame it correctly.

Make certain you're flexible and no feeble offers, make clear specific asks, that is a critical thing to do when I'm negotiating. When I do those things. When I think about those five F's, the first focus on them, frame it correctly, be flexible, and no feeble offers, that allows me to be a fearless negotiator. And that's what we want people to be, that's going to allow you to get better outcomes and build stronger relationships. So I want people to be fearless to go in and focus on the other side with the right issues on the table, focusing totally on the other side's pressing needs, putting the right issues on the table, starting with an aggressive starting point that leaves them room to concede with three offers, they're going to end up as you said, Steve, with stronger relationships and better outcomes for themselves.

Love that, love that example too. One of the things that you've talked about in the past that I find to be super interesting is the differences across generations with respect to negotiating styles and preferences. And the reason why I'm asking about the differences across generations is because many of our listeners are relatively young entrepreneurs in their 20s or 30s, looking to purchase businesses from older entrepreneurs, often in their 60s or 70s. So can you just tell us a bit more about the observed differences across generations with respect to negotiating styles and preferences, and maybe how some of our younger listeners might leverage these to their benefits in future negotiations with folks who might have a couple of decades on them?

Sure. So a couple of things Steve. So one of the things I talk about in the book all the time is a difference between gender, that women often don't negotiate for themselves as much as their male colleagues do. And I think that that tendency to not negotiate for yourself is a really limiting factor. And I would encourage all of the listeners that are female, to be aware that we often don't ask for ourselves, we negotiate really, really well for other people, and on behalf of our companies, but we often don't ask for ourselves. And that's a really key thing when I'm doing a transaction, because my company and myself are very close. So I want to make certain that I'm asking and then I'm asking effectively.

So that's the first thing I would say, the second thing I would say when it comes to generations, is that a lot of younger people will often use channels of communication that they are very comfortable deploying. So a lot of younger people like to text or they like to send a text message or email the other side. And I would argue that that is a problem, because we always, regardless of our generation want to say it, don't send it and see them when I say it. So I want to seek synchronicity in negotiation, I will ask for more and be more aggressive, if I am in a synchronous channel. But when I see you, when I say it, and I'm in the synchronous channel, I literally will be able to see your reaction and make adjustments and know if I need to concede more or not.

I get so much rich information that I lose, if I can't see you at that time. And I think younger generations often have a tendency to think let me just send them a text or send an email, and they don't see the importance of being in front of the other side. And so say it, don't send it, see them when you say it. That's a critical, critical idea in negotiation, regardless of your generation. And then the last piece, I would say that's a generational effect, is that I think it's very important that if you're trying to get a deal to happen, you create a sense of urgency. And I do think that sometimes people don't see why should I do this deal right now. So you know, one of the things that is really important, is to create urgency for the deal.

And this is generated in a couple of ways. Number one, I want to build my BATNA. So I would tell people all the time, you should never be talking to a single buyer, a strategic buyer may have approached you, and you need to go build your BATNA before you ever talk to that single buyer. You don't want to be talking to one and have no idea who else would buy your company, if not them. And you know, Steve, I was talking to one seller who was approached by a strategic buyer. And I said to him, who would buy it, if not them? And he said, well, Vicki, their strategic buyer, they approached me. I mean, I guess I would just continue to operate it myself if I didn't sell to them.

But it was really clear, Steve, I'm sure you've seen this, that once liquidity was on the table, liquidity was looking really attractive and this seller wanted to sell. So I said we're not going to have a single meeting with them until we go find out who else would buy this business. So gotta go generate options, build alternatives, simultaneously build alternatives. So I really want to suggest the importance of building up options. And then when I have options, what I have is an ability to create urgency. Because I don't know about you, but I believe that a lot of people buy something not because necessarily they need it, but because they don't want somebody else to get it. And I think more deals are transacted on this idea of keeping it from somebody else than anything else.

So I always want to have alternatives. And I want to highlight the strength of those alternatives. Because I think that a lot of times people will transact, so that their competitor doesn't get you instead. They might be thinking, maybe it would be good to have you, but they really don't want the competitor to get you, right. And that fear of losing out to the competitor is going to drive the speed of the transaction. So build up alternatives, generate alternatives, and then also use the right framing when you're talking. I think it's a big problem when people go in, and they're talking about the benefit of buying my business, the advantage my company can bring, all of the value add that I can offer that is gained frame rationale.

And that does not create the sense of urgency. The competitor that's interested is a sense of urgency, the fact that you need this, because you're losing share price, the fact that analysts are pressuring you the fact that there's a lot of exposure in your business, the fact that you can reduce your risk by diversifying your portfolio, those are all last frame messages, which are going to create a lot more urgency for the deal to happen, than gain frame messages are. So when I think about those, I think about how we communicate on what things and in what channels and I think all of those are some generational differences.

So Vicki, as we look to conclude here, I'm curious to get some perspective, with respect to when you yourself are a direct party to negotiation. So do you ever find like when you're negotiating, whether it be personally or professionally, do you ever find yourself either not taking your own advice, or noticing tools and strategies and tactics that your counterpart is utilizing on you? And it's probably not the best question that I've ever asked. So I'll give you an example of what I mean. I've read a million books and articles about the concept of anchoring. So I understand it pretty deep at an intellectual level. Yet, I find that anchoring still totally works on me when people anchor at a certain price, I inevitably use that as an anchor for my retort. So I'll say, Well, how about 10% lower or 10% higher? Even though I know all about it, it's still totally works on me, do you have any kind of stories or anecdotes like that in your own experience?

Steve, that anecdote is a very important one. Because what you're revealing there is that anchoring creates a psychological bias, and that we can't avoid getting anchored. So I tell people that all the time, people will say, Oh, I just won't get anchored by their offer. I'm gonna listen to them to gain information, and then I'm just gonna re anchor it. And I always say you can't control anchoring. Because anchoring is a psychological bias that happens beneath our cognitive awareness. And so we know about anchoring, I feel the same way as you Steve. I've written articles on anchoring, I teach about anchoring, I talked about anchoring all the time, and I get anchored by numbers every day. So that's why I know you have to make the first offer because you can't just ignore the anchor that they've established.

So I think it's a really good example of something you could know about. But it still doesn't help you, if you just know about it, you actually have to take the action to use the right strategy of going first instead. And I would say on that tip Steve, you have to recognize who my buyers are. So a lot of times, my buyers had come to my negotiation classes many times, like one of my largest clients, has done probably 60 sessions with me over time. And the partner I negotiate my agreement with has been in every one of those 60 sessions. So he's going to use like every strategy I teach, he's going to try to use, but there are a few things I keep in mind to try to have the advantage even when the other side knows everything I know.

And one of the things I always say is, I want to go in with multiple offers and go first. If I keep that in my mind all the time, multiple offers go first, create a story about how I'm uniquely positioned to address their problems, lead with that, and show how my three offers showcase different ways that I could help them to address their problems. You know, this highlights something that we didn't spend very much time on Steve that I really want to stress, which is when I talk in chapter nine, and chapter seven about using a multiple offer. I have to structure the multiple offer really well. And when I'm structuring it, I'm going to vary those storytelling issues those differentiaters, those things that are important to the other side, I'm gonna vary those across my options.

I'm going to hold constant, generally my trade off issues. And generally I'm going to hold constant my contentious issues, although price might vary because everything falls into it. So when I come to the table with my three offers, they're really going to focus on exactly the right message, which is, how do I differentiators address your pressing business, see, and if I do that, even if the other side knows my strategy, knows what I'm doing, is trying to move me off of it. I've already framed the conversation in exactly the way that is most useful, which is talking about how do I differentiate his address your needs, and so I'm getting that first offer out there, I'm anchoring with it. And I know for sure, they won't be able to ignore that anchor.

And so I think that is exactly how you sort of counter this idea that the other side may be very experienced. And I always say, you know, the strategies I read about in my book work with amateurs, but they also work when you're negotiating with experts. Because Steve, I have to negotiate with experts all the time, I negotiate with people who are expert, because they've been trained by me, and then they negotiate against me. But there are certain strategies that even in that situation, still work really well. And it is to get in there lead with three offers, tell a story about them, leave yourself room to concede. Those are the strategies that work no matter how skilled the other side is, those are the strategies that are critical for all of your listeners to deploy.

That must be a really rewarding, full circle moment for you, when you're at the negotiating table with with one of your students, it must be pretty, pretty incredible. It's been such a treat having you today. I mean, I could talk your ear off and ask an endless number of questions for the next multiple hours. But as we look to conclude here, is there anything that was left unsaid in our conversation? Anything that we didn't talk about that we should have spoken about, any questions or requests of our audience before we conclude today?

I appreciate that, Steve. And one thing I would say is, let's just go back to that bias that I talked about at the beginning and run full circle around back to it today. Because I really do believe if there's one thing I want to make certain that your listeners tried to avoid. It is this egocentric bias. I think the biggest problem we face when we negotiate is that we think about ourselves, and we focus on ourselves. And when we do that, we don't put the right issues on the table. When we do that, we don't set ambitious goals. When we do that, we don't differentiate ourselves. If I could get myself to think about the other side and focus on the other side on their need their problem, their challenge, and how I am uniquely positioned to address that need or solve that problem.

I would do a number of things much more effectively. I would put more issues on the table about addressing their need, I would think about differentiating myself, you know, I don't even differentiate myself if I'm thinking only about myself, because I'm not thinking about how am I unique to them? Why Am I important to them? What problem do I solve for them in a unique and different way, so I don't differentiate myself. And then what is really important to recognize is when I think about them, I don't set ambitious goals, I think about what I have to get, what I need to have, and I don't think about the weakness of their alternatives and set ambitious goals. And the reality is, the more I differentiate, the weaker I will make their alternatives.

The weaker I make their alternatives, the more ambitious my goal can be. And we know goals drive outcomes, so the better my outcome will be. So when I reduce that egocentric bias, I will both build stronger relationships and generate better outcomes. And that's true if I'm negotiating with a customer. That's true if I'm negotiate with the supplier, and very importantly for your listeners, Steve, that's true when I'm negotiating in a transaction. When I reduce that egocentric bias, I will get better outcomes and build stronger relationships. So I would really encourage your listeners to take a look at the book, read through the chapters. And remember that the traps I've defined that expert negotiators encounter are all embedded in that egocentric bias that impedes the performance of all of us when we negotiate.

The book is called Negotiate Without Fear, Strategies and Tools to Maximize Your Outcomes. Vicki, thank you so much for being with us today.

Thank you, Steve. It was an absolute pleasure to be with you and I hope that this was valuable to your listeners, and that your listeners will read the book Negotiate Without Fear. I look forward to hearing their reactions from it. Thanks so much, Steve.

Thank you