How Southeast Asian Start-ups Can Negotiate Like Trump
Begin with an end in mind
PHOTO CREDIT: Getty Images
Whether it is selling the company or buying a company, start-ups will inevitably find themselves at the negotiating table at one point. The question is: Are they gutsy enough to go after what you want?
“Many people fear the abyss. They don’t know what’s going to happen if they leave the only offer they have. But if you’re going to tell the other side you’re walking away, you have to actually have the balls to do it,” Shark Tank’s Kevin O’Leary is quoted as saying in this Inc. article.
To get you started, here are five lessons that will turn Southeast Asian entrepreneurs into master negotiators:
1. Begin with a clear end in mind
Shahab Shabibi, co-founder of Machine Ventures, recommends “sorting out the chips” before diving into the deal. “It’s something I personally use at Machine and that’s to define what is the ideal output of the negotiation,” he says.
For this method, Shabibi draws a table with two columns—one for what the other party wants and the other for what the company wants, sorted in terms of priority.
“This allows you to have a ‘God-View’ of the negotiation since you clearly know what you and the other party want out of this and then once you have it, it’s just a matter of finding the right mix where both parties feel happy,” he shares.
For Yen Pei Tay, founder of Malaysia-based start-up Simplify, “When it comes to negotiating terms, I always put forth the motivation and objectives as transparent as possible so that the negotiating parties can reach a common basis to negotiate.”
2. Know what your deal breakers are
Put another way, parties should know the least that they are willing to accept in a negotiation. This will allow you to decide early on if you want to continue the negotiations or simply move on.
As told in the Inc. piece, when O’Leary and his partners decided to sell their real estate business for $120 million, they all agreed that the lowest amount they would accept was $80 million. And when the buyer came to them with a figure below the minimum they’d set, O’Leary said he was no longer interested. The buyer eventually approached them again with a number that was acceptable to O’Leary: $112 million.
Known as BATNA or best alternative to a negotiated agreement, it represents the most advantageous alternative should the parties fail to reach an agreement. For Tay, “Anything below BATNA should not be considered at all.”
3. Take a different point of view
When at the negotiating table, it’s easy to become fixated on pushing one’s own agenda and forget to see the deal from a different perspective. “I seldom put personal interest, emotions or even taking sides, but rather think from the other party’s angle,” Tay says.
Try to find out the value (not necessarily in terms of money) of the deal to the other party and what they are trying to get out of it.
Shabibi adds, “It's very important to focus on understanding what the opposite party wants out of this deal. Majority of the negotiations that fail is due to the fact that the parties don't understand the needs of each other, not because they can't agree on them.”
4. Be mindful of the culture
Culture influences the negotiators’ mindset, behavior, and communication style, as discussed in a paper by Michael Benoliel published in the Eurasian Journal of Social Sciences in 2013. Western individualism contrasting with Asian collectivism is only one of the differences that make negotiating across cultures somewhat of a challenge.
He writes, “Successful cross-border deal-making begins with understanding the deep cultural values that drive behavior. Negotiators should be culturally informed and sensitive.”
5. Choose whom to negotiate with
Tay advises other start-ups to avoid negotiating with people who continuously make excessive and unreasonable demands. Instead, choose strategic partners or people you actually want to do business with.
“I maintain a profile of good investors and continuously feed them with our progress and updates to set a basis for better negotiations later,” he says.