“I could sum up my negotiation mentality as a seller in one phrase that I’ve used as short-hand for my portfolio companies for years, ‘Everybody wants their pound of flesh’,” he writes.
So as distasteful as it might be to you,it’s vital to build in a buffer into your negotiations, Suster says.
After dealing with your buyer and making concessions (dropping the price, including more licenses for free, etc.) the deal needs to pass through IT.
“This is the “deal prevention” team in many big corporations,” he writes. Suster says they’ll most likely want things like security reviews and harsher penalties for non-compliance.
“Now it’s time for the real leg breakers, the procurement team” he writes. “All of your sales training techniques are useless to their procurement Teflon. Procurement departments are professionally aloof from sales processes.”
Suster says you have to look for a buyer that knows that procurement will demand unreasonable terms and who wants to work with you badly enough that they’ll push procurement to be fair.
Suster warns against starting negotiations with your final position.
“The sooner you accept realpolitik the sooner you realize that the incentive structures of dealing with companies, organizations and political structures requires you to play the game,” he writes. “It requires you to start with some fat in your deal.”
Suster says it is important to have some room to compromise.
“If you realize their internal incentives you are ironically doing them a favor by having some fat on price,” he writes.
For more tips on negotiating, read Suster’s full post here.