ADVANCED TOPICS INTERNATIONAL MERGERS ACQUISITIONS AND JOINT VENTURES

ADVANCED TOPICS: INTERNATIONAL MERGERS, ACQUISITIONS AND JOINT VENTURES; EXTRACTIVE INDUSTRY/GOVERNMENT AGREEMENTS 2 -3 May, 2014 BULAWAYO, ZIMBABWE Negotiation Strategies and Techniques Legal_1: 27864506

ROLE OF THE LAWYER IN NEGOTIATING A COMMERCIAL TRANSACTION 2 l Eyes and ears of the client (analyzing the deal) l Guide for the client (actively taking the client through the steps of the transaction and advising the client along the way) l Advocate for the client in negotiations

WHEN ARE YOU NEGOTIATING? 3 l When you are in a face-to-face meeting with opposing counsel l When you are reviewing an agreement or a mark-up received from opposing counsel l When you are advising your own client

NEGOTIATION – WHAT IS A SUCCESSFUL OUTCOME? 4 l An agreement that meets the legitimate interests of each party l Resolves conflicting interests fairly l Is durable l Improves, or at least maintains, the relationship between the parties

TYPES OF NEGOTIATIONS – THE THREE C’s 5 l Competitive (like sport – always a winner and a loser) l Cooperative (win-win; power is balanced; motivated to develop trust and achieve compatible outcomes) l Collaborative (win-win; power is shared; trying to achieve maximum return for each; joint problem solving; akin to partnership)

BARGAINING STYLES/TYPES 1. Competitive (WIN/LOSE) 6 2. Cooperative/Collaborative (WIN/WIN) ● Proposing and applying principles Concern for victory ● Establishing mutual trust ● Holding out ● Developing options ● Creating deadlines ● Trading off priorities and brainstorming ● Establishing time frames ● Argument and persuasion ● Lack of trust ●

IMPASSE AND DECISIONS Competitive 7 Cooperative ● Possible impasse ● Impasse less likely ● Compromising and splitting the difference ● Mutual decisions through joint problem solving ● Adding conditions ● Creating alternate outcomes/deals

FINALIZING THE AGREEMENT Competitive 8 Cooperative ● Insisting your forms be used ● Working on a single agreement ● Unnecessary negotiations over draft language ● Agreeing to terms

PROCESS – SIX STAGES OF NEGOTIATION 9 l Strategize l Set the Climate l Obtain Information l Justify Positions l Bargain l Agree

STAGE 1 - STRATEGIZE Identify Your Currencies (i. e. what is it you have to offer? ) Plan Your Currencies Other items besides money: 10 l Timing l Administration l Support l Future l Service l Referrals

STAGE 1 - STRATEGIZE List your Objectives - Objectives define scope and set the benchmark for success 11 l What are your client’s goals? l What are the goals of the other side? l What can your client concede? l What must your client achieve? l Your first offer l BATNA (best alternative to a negotiated agreement)

STAGE 2 – SET THE CLIMATE Learn To Set a Positive Climate l Conversational l Positive l Relational l Energetic Set the climate to suit the other negotiator’s style l 12 Probe for attitudes

YOUR MANNER AT MEETINGS Open: l Focus your eyes on the other person l You look: l Interested l Trustworthy l Friendly Involved: l Keep your arms on the table l Hold your hands apart Responsive: 13 l Nod while listening l Use appropriate facial expressions

STAGE 3 – OBTAIN INFORMATION ● Learn Focused Listening Techniques ● Focused Listeners Encourage Speakers Physically: l Nod l Take notes Verbally: 14 l Offer encouraging phrases l “I see …“ l “Tell me more …“ l “Hmm …“ l “That’s interesting, please go on …“

STAGE 3 – OBTAIN INFORMATION Ask Open-Ended Questions What is an Open-Ended Question? l To which you do not know the answer l Which cannot be answered with a “yes“ or “no“ response Open-Ended Question Examples What How Why 15 ● ● ● What are your concerns What is your timing? How did you determine your price? How long has it been an issue? Why is this issue a priority for you?

Probe for Information l Confirm with “You“ Statements: l l Summarize what’s been said frequently: l l “So, what you’ve said so far …“ Ask for clarification l 16 “Let me see if I understand, you think that …“ “Please go over that again. “

STAGE 4 – JUSTIFY YOUR POSITION 17 l Get the other side’s negotiator to state its price or position first l Give your counter-offer l Give the lowest (highest) price you can justify

Then sell your position l l Outline the benefits of your offer l Leverage existing conditions l Use information gathered l Stress time, feelings, money And discern their real position l The position they take vs. Their real interests 18

STAGE 5 – BARGAIN ● ● Other items ● besides ● money ● ● 19 Timing Administration Support Future Service Referrals

Use Conditional Language Examples: 20 l “What if I … then would you …? “ l “Suppose we … then could you …? “ l “If I were to … then would you …? “

POSITIONAL BARGAINING l l l 21 Don’t bargain over positions – it leads to rigidity and adversely affects the relationship Focus on interests Produce options and possibilities Listen actively. Try and understand the other side’s position. Ask questions Make sure result is based on objective criteria (FMV, precedent, etc. )

STAGE 6 – AGREE Successfully Negotiate a Win/Win Situation l Both sides are better off l You were each treated fairly l You would negotiate with the other negotiator again Legitimize the Terms l 22 Put the terms in writing

Learn Tactical Rules 23 l Never say yes to the first offer l Never reveal a deadline l Never offer to split the difference l Periodically use “what if“ statements l Avoid negotiating on the phone

Negotiations Over the Phone 24 l Be the caller (there advantages to surprise) l If you are called, get information and call back l Be prepared – use a list l Buffer against interruptions l Resist time pressures l Talk less l Take notes l Confirm agreement in your own words

USE TACTICAL POSITIONING 25 l With two people – sit where you can watch both l In large groups opposing their small group – stay together l In small group opposing their large group intermingle

Apply Ethics l It is a long life and your personal reputation is an asset you must not tarnish l Use the highest ethics when negotiating l You need to be trusted and viewed as trustworthy l You expect them to be bargaining in good faith; you should too Identify and Handle Ploys are: 26 l Predominant at competitive level l Less frequent at cooperative level l Inconsistent at collaborative level

TYPICAL NEGOTIATION PLOYS 27 l Good guy-bad guy l Quoting authority l Cherry picking l The “flinch“ l Ultimatum

DIFFUSING PLOYS Method: l Acknowledge l Restate your position l Return to the topic Example: The Nibble 28 l Other Negotiator – “Why not throw in the shirt with the suit? “ l You – “I can understand why you like the shirt, but that’s a separate item. We were talking about the suit …“

DIFFUSING PLOYS (cont’d) Example: Printed Word Authority l Other Negotiator – “It says right here that …“ l You – “Well, guidelines are helpful. In this situation …“ Example: The “Flinch“ 29 l Other Negotiator – “What! You must be crazy with that price!“ l You – “I can see you’re concerned by the price. Let me show you why the item is so valuable …“

CREATIVE METHODS TO ACHIEVE NEGOTIATION GOALS l 30 Develop momentum l Start with the easy issues l Use the “parking lot“ l Build trust and share information, don’t keep information to yourself (remember the children and the orange story) l Listen l Speak for a purpose, don’t say too much l Sell your position, don’t malign the other side l Don’t be in a rush to agree l Don’t be clever; be useful l Be honest, forthright and courteous

INCREASING NEGOTIATING EFFECTIVENESS 31 l Understand the context – Who needs the deal more? l The value exchange l The mental edge l Controlling temper and emotions l Never be afraid to ask (seemingly) dumb questions l Respect the team leader l Use technology to advantage l Know when to be tough l Know when to say yes

DEALING WITH PERSONALITIES 32 l Know your team strengths, and ignore the distractions l Have a strategy for each personality: l the “Big Picture“ Person l the Alpha Male/Female l the Bully/Intimidator l the Nit-picker l the Waffler l the Silent One l non-English speakers l the Insecure Negotiator l the Intransigent One l the Consensus-builder/Collaborator l your New Best Friend l the Problem Solver

COMMON MISTAKES TO AVOID 33 l Assuming the negotiation is a fixed pie and creating a win-lose negotiation l Overvaluing your assets or position l Abusing your power or leverage l Not knowing what you want l Over-commitment to a certain outcome

DEALING WITH UNANTICIPATED OCCURRENCES l l 34 Change is the only constant l Anticipate change l Manage your reaction to change l Be honest with everyone l Use change to your advantage Change of instructions

ORGANIZATION OF THE NEGOTIATION l l 35 Who holds the pen? l Control the nuances l Cost savings l “Big picture focus“ Organize the team l Leadership and communication l Motivation l Co-ordination and consistency l Downtime

FINAL THOUGHTS 36 l Face-to-face negotiation is essential l Keep a backdoor open l Sometimes, no deal is the right answer

COMMON PROBLEMS How would you address the following: 37 1. Opposing lawyer who says “no“ without providing any explanation or alternatives to a desirable or must have provision for your client? 2. Opposing lawyer who refuses your proposal or draft with a statement of “no – it is not market“? 3. Opposing counsel/side who constantly “tables“ your proposals so no progress is made? 4. Opposing lawyer who says “we have no authority to agree to that“? 5. The lawyer who says he follows “the golden rule“ – i. e. “we have the gold so we make the rules“? 6. The retrade – the opposing lawyer who yesterday agreed to certain matters who today arrives and has another (less attractive) proposal?