Negotiations are an inherent part of building your PR or communication business. When using Mergers & Acquisitions opportunities to create value, there are plenty of factors you need to be aware of.
Whether buying other small agencies to spur organic growth, selling to an external buyer to combine synergies or exploring a future sale as a part of succession planning, beware. It is easy for negotiations to go awry if you are not prepared and counseled appropriately.
Should you find yourself down the slippery slope in the midst of M&A negotiations, take a deep breath, and then keep these three items in mind as you salvage the situation.
1. Demonstrate honesty and demand it in return. When it’s clear that negotiations have gone awry, it’s time for an honesty check.
First, take stock of yourself; your rationale for being at the negotiating table, your firm’s strategic plan, your personal succession goals, any expected timeframes, and take a step back, if necessary. For example, genuinely assess if you have price expectations based on an M&A climate from two years ago.
The ideal situation is when both buyer and seller are brutally honest from the get-go. Did you, as the seller, have a particular price for your agency in mind, and didn’t realize it until after negotiations began? If so, respect the time of everyone involved, be honest and state how your thinking evolved. It’s never too late for honesty with a potential buyer.
The conversation may be uncomfortable for a moment. But you may salvage a relationship and future opportunity with that buyer and his or her network, even if the current one doesn’t pan out.
2. Listen, restate and reply in writing. During conversation most people formulate responses while the other person is still talking. The same can be said of negotiations, where stakes and emotions can run high. Try and listen, restate, and reply in writing. Doing so engages multiple senses and can help focus negotiations to get back on track.
Put offers and counteroffers, and even statements of understanding, in writing. This creates a safe lifeline to grasp onto and keep negotiations from spiraling out of control.
3. Know your worth and benchmarks. Knowing your firm’s current market value up front is the most solid position to be in. However, pulsing the industry for a more current snapshot while in the midst of tricky negotiations can still net valuable insight. And knowing your specific benchmarks, especially if on par with model firms, can often reinvigorate talks that have gone sideways. What is more, knowing your true valuation and benchmarks put you in a negotiating position of strength.
What have you learned from PR deals that were about to collapse but you were able to salvage?
Jennifer Casani is a partner at Gould+Partners. She can be reached at [email protected].