The art of negotiation
By Greg Guy, VP/Patrick Communications
(from February's RBR/TVBR Solutions Magazine)
Every day the trade publications are full of station sale announcements. Stripped down to their essential elements of buyer, seller, call letters and price, these announcements do not mention the months of negotiation that have gone into reaching that point. In the radio business, as in any business, negotiating skill is a key element of success.
Some people are born great negotiators while others develop their skills from training, practice and experience. Regardless of an individual's level of expertise, there is always room for improvement. In negotiating a radio transaction, there are several key elements which, if addressed properly, can position a buyer or seller for a more positive result. Here are some helpful tips to set you up for success in negotiating your next radio deal.
In negotiating, preparation has a disproportionately large effect on the outcome of the negotiations. Benjamin Franklin put it best when he said "By failing to prepare you are preparing to fail." The first step in preparing to negotiate a radio deal is to assemble a good negotiating team. Typically this team includes a broker, attorney, engineer and accountant. The make-up of this team is very important as each member will provide you with the information necessary to make educated, informed decisions. Take extra care in selecting an attorney and a broker as they are key elements in the negotiations and will go a long way toward determining the quality of the deal that is cut. In both professions, there are "deal-makers" and "deal-killers". Make sure that the people you retain understand your goals and will work with you to accomplish them. With the right team in place, you have the resources and expertise to make informed decisions.
It is critical to do your homework when evaluating an acquisition opportunity. The more information that you can gather about the other party, the more effective you will be when you are negotiating. Try to evaluate the situation from both sides of the table. What are the pressure points that the other side is facing? What are their motivations, desires, resources and limitations? Each party brings to the table a mental list of issues, both positive and negative, which they face. This "list" is a closely guarded secret as it typically contains the limitations in which each party is willing, and able, to negotiate. More importantly it contains the reasons for these limitations, which can often be turned into opportunity. The more information you can gather from the other parties list, the more effective you will be in your negotiating.
At the same time, managing the information on your list is essential in protecting your interests and negotiating the best deal possible. In managing your own list, evaluate and prioritize your goals. Recognizing the strengths and weaknesses of both positions is essential to good negotiating. One of the easiest ways of gathering this information is simple but often overlooked-- listen. Listening is one of the most important tools of an effective negotiator.
Aside from listening, your data gathering should include background information on deals the other party has negotiated. Your broker or attorney can advise you on typical behavior of buyers and sellers and may have negotiated with the party across the table before. This experience can offer valuable insight into their negotiating styles. Understanding the style of the other party can clue you in to what type of strategies you can expect to hear during the course of the negotiations and how they should be handled. Deadlines and "take-it-or-leave-it" offers carry far different meanings depending upon the person making the statement.
Another excellent source of background information is the purchase agreements used by the party in other transactions. Purchase agreements from the past several years are available on the Federal Communications Commission website. Armed with this information, you see where the other party has conceded and where they have held firm in past negotiations. By reading between the lines you can also get a peek at what was on their "list" in other deals.
Equally important to doing your homework is the concept of managing the tone of a negotiation. Most people look at negotiating as a contest with a winner and a loser with each gain by one party equal to a loss by the other. While this approach can result in the parties reaching agreement, it is short-sighted. In broadcast transactions this method often results in both parties leaving money on the table. A calm, pleasant demeanor can communicate a point just as effectively as yelling and screaming and also has the ability to help the other party appreciate your position. An adversarial approach rarely works and often has the effect of putting further distance between the parties.
The most effective and rewarding negotiations are win-win negotiations. Win-win negotiating often is misinterpreted as any negotiation where a compromise is reached. A true win-win negotiation is one in which additional value is created that is unique to the two parties in the negotiation. This is a scenario where one plus one equals three. The key question to a win-win negotiation is "What unique assets, opportunities and issues are the parties faced with that can be addressed or enhanced uniquely by the other party?" With a little digging, there are typically a number of win-win opportunities in every broadcast deal.
Once the deal is done, even more can be learned by going back and evaluating your steps (and missteps) throughout the negotiation process. What worked? What didn't work? What would you have done differently? Experience is an excellent teacher. Others will judge you based upon your performance in previous deals. Why not take the opportunity to learn and improve your negotiating skills by tapping this excellent resource.
It is important to remember that there is but one opportunity to negotiate a deal. The success or failure of your business can hinge upon the decisions you make during negotiations. With so much on the line it is important to position yourself for success. Regardless of your skill level, given the right preparation and approach, you can dramatically increase the effectiveness of your negotiating.
Greg can be reached at [email protected] or 410-740-0250 ext. 3003
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