Imagine if you will, a boxing ring. The arena is dark, there is no audience and there are only four people present – the guy in the red shorts, the one in the blue shorts and a second for each boxer.
The second for the boxer in the blue shorts has had many years of experience in these fights, and often swaps from active boxer to referee and coach while the boxers take breaks in their respective corners.
Just to confuse matters, blues’ second also moves over to the red corner to mop down the brow of the red team. In short, the match gets confusing, and at times confusion is deliberate and needed, to psychologically move everyone around the ring.
Before long, blue boxers’ second is refereeing, and coaching red shorts, while blue shorts cheers from the side and occasionally comes into the ring for a jab and a stab as does red shorts’ second, at times it becomes an all-out brawl.
In some cases, a dispute will have a knockout punch and it will be over before it begins, in others both will look each other over and conclude better just to take a pass on the fight and settle it amicably. Others are an endurance match – he who endures longest, wins.
In this case all four had high levels of endurance. In the end of this round blue shorts came out ahead on points and red shorts feels they acquitted themselves commendably after three years of slugging it out which followed five years of shouting abuse at each other. In the end both sides were happy with an agreed fair result.
How is this possible? Both sides and both seconds learned to respect each other and their strengths.
This is a story from the Value Added Services (VAS) team at Gilligan Sheppard, where they were the second to blue shorts.
Both businesses had joined forces to create a third business, but both businesses were still competing with the joint venture and each other.
Blue shorts believes that the other party has been behaving badly and had broken all trust with them. Meanwhile, red shorts believes that the other party caused him to react that way and it was not bad behaviour at all – this has broken all trust with blue shorts.
The only viable solution is that they should no longer be in business with each other. Inevitably this means they’re either closing the business or buying the other out.
Red shorts has no intention of buying anyone out because he has full control.
How do you break this impasse?
This is the advice from the VAS team on how to handle a seemingly impossible conflict and come out the other end with both sides accepting a fair result.
Listen to the story
The first step in any negotiation is to listen to the red shorts story, ask questions to get the details (not to question them) and ensure they feel heard. You don’t have to believe the story but recognise that they do.
In this example, he claims that blue shorts has behaved badly, and therefore everything he has done is justified.
Q. So you no longer trust blue shorts then?
A. No, not at all.
Q. Well then, for trust to be rebuilt, what do you need
A. It is completely impractical.
Create a common ground
After many hours of listening to reasons, excuses, and likely utter bullshit, you get to a place where you they agree that the only solution is for the business to cease and be divided amongst the shareholders.
The common ground you have merged between them, is that they do not trust each other, and they cannot continue.
Inevitably there is an expectation gap between the parties. The wider the gap, the more you must do to create an environment where both parties just want the fighting to stop.
You must work to condition both sides as to what is achievable – in short manage expectations.
If a deal cannot be done quickly, you must then take the other side to a big, black, dark, hole of what the future looks like if they don’t do a deal.
Everyone is vulnerable, you must find their vulnerability – economically and emotionally. Make their life as difficult as possible, with as much grit, annoyance, pain and suffering as possible.
Remember that not all sides play the same way. Some play to the path of least resistance and others annoyingly enjoy resistance and the game of negotiations.
Be prepared to lose it all
You can only go into such an environment of game playing where you are prepared to lose everything to deprive the other side of anything. In short, you are burning it to the ground.
Having done that, you must be prepared to carry it through, or the other side will not believe you. In such a negotiation, the winner is the one that can bear the loss.
Don’t game early, game later
You need to state early what you expect to happen so that no one is confused about what outcomes you are prepared to live with.
The outcomes that we identified in this situation were.
- Divide up the assets
- Sell the assets to a third party
- Liquidate the company
- One party buys out the other
Liquidation means that everybody loses. If we were to petition the assets, then at least everyone would get something. And a buy/sell agreement means that one gets the money, and one gets the assets.
Red shorts decided that he would just stay put, leave it as it was – which was very distressing for blue shorts who wanted it done with. Red shorts was swinging with the passive aggressive combo.
We made it very clear that if options 1, 2 or 4 were not taken, we would force the company into liquidation and we set about doing so to prove we would.
More than one step
Eventually, a transaction was agreed to where we would petition the assets – divide them up. However, red shorts had not fully analysed this and soon realised that blue shorts would end up with a bigger portion of the assets than they had contemplated.
Red shorts welched on the deal.
It wasn’t that they were getting less than they thought, it was simply a step for them in the negotiation of the purchase of our shares. They had no intention of selling a single asset to us.
Sometimes, actually often, negotiations are not completed in one step.
Once it was clear that they wished to buy, the key issue was managing their expectations in what they would have to pay. We had to lower the gap between our price to sell and their price to buy.
Eventually we got there.
What’s the motivation?
During this process, both parties came to see that even though we were representing one side, we were motivated by finding a solution, not necessarily a winner – we were capable advocates that behaved fairly.
Once we had negotiated to a stronger position where we could take advantage of the other side to improve our outcome, we resisted the temptation to do so. This won us the trust and respect of the other side.
- When you are negotiating from a position of weakness, be prepared to lose everything.
- When you are negotiating from a position of strength, behave fairly and with generosity.
- Play very hard, be transparent and negotiate with maximum intensity and where necessary maximum aggression.
If you do behave this way during a transaction, you will win the respect of both sides and deliver a fair outcome for all.
If you are needing some help in a boxing ring of your own, have a chat with our VAS team at Gilligan Sheppard and see if we’re the second for you.