Negotiating Expectations Clearly and Consistently

Halpin mergers

In my e-book, 8 Practical Ways to Avoid Becoming an Under performing M&A Statistic, #3 is to negotiate expectations upfront and continuously. This is a critical skill and a fundamental requirement for building alignment in an organization but in an M&A transaction, it is critical.

During the honeymoon phase of a merger or acquisition, the future looks rosy and the impossible feels very much within reach. Without a proven method to negotiate expectations, especially around compensation, the rosy future can become tarnished or dimmed quickly. Without the facts people tend to make up stories. With any amount of ambiguity the stories your colleagues make up will inevitably damage the potential value of the future entity.

Regardless of your role, why put the potential value of the new entity at risk simply because you lacked the skills, tools or structure to negotiate each and every expectation?

Let’s take a step back and clarify what we mean by expectations. An expectation occurs when one person has a belief that another person or team will deliver a certain product or service. Often these expectations also include some sense of timing or a hard deadline but even that can be un-negotiated.

It is human nature to allow misperceptions, misconceptions and just made-up stuff float around randomly and dangerously between our ears. Recent studies by the National Institute of Health suggest that each one of us has as many as 50,000 conversations a day in our head….all by ourselves.

Many of these swirling conversations are un-negotiated expectations. I use the term un-negotiated because we rarely negotiate our expectations fully and with enough clarity to prevent future frustration or outright breakdowns.

I believe the greatest source of stress in the world today – at work and at home – is these un-negotiated expectations.

A primary reason for this is that with our pace and level of intensity, often multi-tasking and rushing from one meeting to another, we cannot clarify even to ourselves exactly what specific, measureable results we need and by-when.

When we have any level of ambiguity, we will make up stories. This is what human beings do.

The first step to stop making up stories that lead to frustration, disappointment, divorce and failed M&A transactions is to get the facts and clarify what is most important to us; before we try to negotiate with another party.

This requires some introspection. In just 20-minutes, sitting with a blank screen or a blank pad of paper, if we ask ourselves:

• what do we most want from this transaction?
• what will drive a successful transaction and transition?
• what do I want?

You will find that these answers just flow once you have this opportunity to think about the big picture.  Think about the last time you let your mind relax; on a jog, at the gym, driving?  Now think about the power of your insights during that period of time.  This is the potential for this kind of ‘think time’.

I ask people to start by asking, if I could wave a magic wand over this situation, what would I want to see created?

These expectations can relate to:
• the initial terms of the deal,
• the compensation and retention bonuses for you and your team during the transition,
• how you want your people to be dealt with during the transition,
• the details to be managed to launch the transition and move it forward, or
• as simple as expectations of a key colleague around a certain project required to move things forward.

These expectations can be as complex as how to manage to the merger of billion dollar organizations or getting you a small but valuable resource required for the launch – and everything in between.

Once you have the clarity you need to ask for what you want, the next step is to identify the responsible party who has the authority and decision-making ability to actually negotiate with you. In some instances this will be the Board Chair of the acquiring entity and in other cases it will be a staff person. The process is no different. You want to make your request of the right person; someone with a commitment and the authority to comply with your request.

Once you know what you want and who can provide it, the next step is to identify the proper method and timing of the request. Regardless of the level of the person, you should not make requests by text or even email. Approaches most of us believe to be the most ‘efficient’. Rarely though will they be effective approaches.

Let’s imagine you are simply negotiating expectations for the acquisition of an inexpensive but valuable tool that will make your job easier in the transition. You could simply email or text your colleague who is charged with making these small purchases. However, without a quick phone call or face to face, the likelihood of your expectation not being met is much greater.

With a quick phone call or chat, you have the opportunity to connect with that individual, check-in, provide some context about where you are in your transition and why this tool is an important resource. You could provide the timeframe too.

Once people have this kind of context, they are much more likely to understand how to prioritize your request. Given that you are doing it face to face or via the telephone, it gives the other party a chance to ask clarifying questions and confirm that you are both on the same page.

They key is to not multi-task, even if you are on the phone. If your expectation is not going to be fully met, there will be some red flag during this initial conversation. If you are multi-tasking, you will not be able to pick up on that red flag and drill down into the ambiguity or confusion.

The final, and most important step, is to then document the agreement. Ask the other party when appropriate to send a clarifying email with the expectations and due dates. If it is inappropriate, then send an email yourself to the other party just to ensure everyone is on the same page. Often, because of our pace and intensity, obligations can be over-looked or forgotten completely. It is always useful to have a written record of the original agreement.

In summary, we have to first define what we need and then we have to make the request of the right person and we have to ‘throw them the ball in a way they can catch it’.

If you find yourself frustrated on a regular basis about a merger, acquisition, transition or just in general, ask yourself, ‘who am I being that is giving my colleagues permission to disappointment me?”. Most likely you are missing one of these four simple, yet valuable steps:
• Preparation to clarify what you need,
• Making the request of the right person,
• Structure to support both parties in being clear about what specifically is needed and by when, and
• Document the agreement with a simple email.

Katharine Halpin has been facilitating transitions in organizations of all sizes since 1995.  She founded The Halpin Companies to fill a void she saw everyday in her CPA career.  “Transactions and transitions fail to accomplish the forecasted shareholder goals simply because no one is focused on harnessing the power of the original enterprise.  Legal and Financial goals become the focus.  By focusing on leveraging the original enterprise by getting the right people in the right roles focused on the right priorities, organizations can grow by a factor of 200% to 300%”.

Katharine and her team have amassed a suite of tools and methods to exponentially increase shareholder value during a transaction or transition.

For a complimentary consultation, Katharine can be reached at 602-266-1961 or via email at [email protected] or to buy Katharine’s book, click here.