The business negotiation process is often complex and stressful. For the owners of small businesses, though, a successful M&A transaction can be pivotal to their future, bringing new financial stability and strengthening relationships with existing employees, customers and suppliers.
Considering these factors, it’s important to nurture an atmosphere of cooperation with all parties throughout the deal to ensure the smoothest process and best possible outcome. One way to do that is for business leaders to emphasize emotional intelligence (EQ) in their company and on the negotiating team before, during and after the transaction — ultimately making the entire process simpler, more pleasant and more productive.
Before the deal
Emotional intelligence is the ability to:
- Monitor one’s own and other people’s emotions,
- Take responsibility for one’s behavior and well-being,
- Consider and empathize with others’ perspectives and
- Use the knowledge to interact with others in a positive way.
Put simply, it’s the practices of self-awareness, self-management, social awareness and social skills. When employees put these skills into action in the workplace, cooperation, participation and collaboration are likely to result.
A team’s emotional intelligence is valuable among coworkers. There are additional benefits as well, including that an emotionally intelligent work atmosphere can make an organization more attractive to prospective buyers. Team members utilizing EQ can better understand each other’s behaviors, communication styles, stressors and more, thus improving their overall performance. Having an emotionally intelligent team allows the business owner to tout not only the company’s quantitative metrics to potential buyers, but also its qualitative features — such as the team’s cohesion — to prove its worth.
Meanwhile, emotionally intelligent business leaders will want to think about what they’re looking for in a buyer — someone who will continue emphasizing the importance of EQ in the workplace. In the same way, buyers will want to assess their organization’s strengths and weaknesses, current conflicts and potential issues that could come as a result of the merger or acquisition. By doing so, the buyer and seller can get on the same page and demonstrate that they value the same characteristics of the company.
Because the negotiation process is a naturally challenging time, emphasizing emotional intelligence encourages those involved to avoid conflict and respect each person’s decision-making process. Here are a few common scenarios that occur during negotiations and how to handle them with emotional intelligence:
- Navigating conflict during tense conversations: Remember that the two parties involved in negotiations are working to achieve different goals that may sometimes contradict each other. Respectfully listen to the other side and consider their stance, then adjust your response based on each individual’s personality and communication style.
- Keeping a party at the negotiating table: It’s much easier for everyone to remain in negotiations than to reapproach someone who has already left the conversation.Individuals are likely to get frustrated if they don’t feel like they’re being heard. It’s good to make sure that all ideas, even impractical ones, are given a respectful airing during the negotiation process.
- Deciding the deal’s schedule: The timeline of a deal shouldn’t be a “one size fits all” approach. Each deal presents unique opportunities and challenges, and it’s important to be aware of each party’s time constraints and deadlines, such as the need to complete a deal within the current fiscal year or to wait until the next one. With these considerations in mind, negotiations may be completed on a schedule that makes the most sense. As I like to say, it’s best to get the deal done “as fast as possible, but no faster.” Both parties should be transparent in communication and about their expectations from the beginning in order to remain emotionally invested throughout the process — however long it takes.
After the deal
Oftentimes, after a deal is complete, business leaders tend to suffer from tunnel vision as they focus on successfully integrating the two companies’ teams, workflows, leadership styles, technology and more. While the nuts and bolts of operating a successful business can’t be overlooked, leaders shouldn’t forget that their organization is made up of multidimensional individuals, each with their own strengths, weaknesses, interests and needs.
Emotionally intelligent managers can use the unique traits of each employee to the company’s benefit — capitalizing on each person’s skills, communication style and personality by putting them in the role and on the team where they will thrive most. Being intentional about these decisions in the beginning will establish a well-functioning team — one made up of people who understand, support and communicate well with each other — which will make all the difference later on when working through the challenges that naturally arise from a merger or acquisition.
Business deals are a complicated road to navigate, both on the buying and selling side. Establishing a healthy team before negotiations and encouraging respect, clear communication and overall emotional intelligence throughout the process will lead to a more resilient team for years to come.
Frank Williamson is the founder of Oaklyn Consulting, a consulting firm that helps investor groups and private businesses, from startup to middle market, with mergers, acquisitions, capital-raising, investor relations, succession and other strategic corporate finance decisions. Oaklyn Consulting does not work as a broker but as an extension of clients’ boards and management teams, charging time-based fees for investment banking advice.