Negotiation Techniques for Cross-Border Transactions
Posted May 17, 2016 in Articles
In a recent article on the Daily Blog of Harvard Law School’s Program on Negotiation, Jeswald Salacuse, author of The Global Negotiator: Making, Managing, and Mending Deals Around the World in the Twenty-First Century, discusses six tips for effective international negotiations. The tips are noteworthy not only for their practical guidance, but also for the distinctions they draw between the characteristics of cross-border deal-making and the tendencies of many U.S. negotiators when working on domestic transactions.
In particular, the article emphasizes the role of diplomacy in cross-border transactions. While more than half of American executives that Salacuse surveyed for his book stated that their primary objective in negotiations was simply to close the deal, cross-border negotiations tend to have a much heavier emphasis on the relationship-building aspect of the process. For negotiators in the United States doing business overseas, understanding and applying these six principles may help not only close the deal, but build a lasting relationship in the process.
Six Tips for Better International Negotiations1. Focus on the Relationship, Not the Closing Deadline.
The relationship-building aspect of cross-border negotiations cannot be overemphasized. While it may be easier to focus on the closing deadline and put your head down until the work is done (and you may feel like you don’t have time for anything else), it is important not to overlook the fact that, in many countries and cultures, the relationship is the deal. Think outside of the contract, and focus on the connections and trust you will need to build for doing business once the contract is signed2. Look for Common Ground.
Salacuse, borrowing from 18th century French diplomat Francois de Callieres, calls this “harmonizing interests.” Basically, the idea is to put yourself in the other party’s position. If you are dealing with a confrontational issue or are concerned that you may be approaching an impasse, look for ways to achieve what both sides want from the deal.3. Be Patient.
The relationship-building process takes time, and rushing to put a contract in place will often raise concerns. Salacuse also warns of various other risks that can arise when haste dictates the tempo negotiations, including the potential to overlook important issues that ultimately lead to litigation.4. Be Understanding.
Different cultures have different norms. They have different social cues, different tendencies and even different pop culture references. In international negotiations, it is critical to be self-aware and avoid mistakes that can be taken as a sign of apathy or disrespect.5. Listen to Everything.
In negotiations, listening is vital. Beyond being attentive to verbal cues, Salacuse also uses “listening” to refer to overall awareness of the circumstances of the negotiation. In cross-border negotiations, it is critical to listen and pay attention to:
- Your counterparty’s words and actions;
- Your own words and actions; and
- How your counterparty reacts to what you say and do.
Finally, even setting cultural differences aside, in many deals it can be critically important to understand and respect your counterparty’s sensitivities. If your company is the big fish seeking to scoop up a smaller competitor, are your target’s senior leaders concerned that your way will suddenly become their new way of doing business? If independence and equality are deal breakers, showing that you’re willing to listen may be what it takes to get the deal done.
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Mithras Investments provides negotiation, risk analysis, due diligence and other consulting services for cross-border mergers and acquisitions in the U.S. and abroad. To learn more about our integrated approach to assisting companies with international transactions, call (305) 517-7911 or contact us online today.