Mastering the Art of Virtual Negotiations: Strategies for Success in Digital Deal-Making

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April 10, 2024
Negotiating Your Acquisition
Mastering the Art of Virtual Negotiations: Strategies for Success in Digital Deal-Making

Since the beginning of COVID, almost all negotiations have been occurring virtually. But even before Covid-19, an increasing number of dealmakers were connecting through digital tools. Video technologies, low-cost teleconferencing, and email have all become efficient ways for teams to prepare together and negotiate with counterparts.

First, the bad news: Negotiating virtually tends to leave parties with poorer objective results and feeling less warmth and trust toward one another. Moreover, a meta-analysis conducted in 2002 suggests that group decision-making is less effective, less satisfying, and more protracted when groups don’t communicate face-to-face.

When it comes to email — which introverts are particularly drawn to in general — we tend to be less cooperative, perhaps because we are less inhibited in expressing negative opinions or negotiating against ourselves. Only using email, especially for complicated matters increases the risk of misunderstandings, and we overestimate how well our messages have been understood by recipients.

If virtual negotiators face additional barriers to finding joint gains, the good news is that research also suggests ways to enhance the chances for success in virtual settings.  

1. Rehearse with Your Team

Calls or videoconferences with four or more parties can quickly go off track. Be sure to ask: Who will open the meeting? Explain a proposal. Answer questions? Summarize the next steps. How will we communicate with one another offline?

2. Limit the Backchannels

Messaging during negotiations can be important, but one study found that multitasking on a smartphone while negotiating led to lower payoffs and being rated as less professional and less trustworthy by counterparts. When communicating with teammates during a negotiation, brevity is a virtue.

3. Don’t Dial In!

Negotiators communicating by video performed better than by phone, email, text, or messaging. And those using a large computer screen performed better than those using a small one. The easier it is to see your counterparts, the less effort your brain will waste.

4. Keep it Short and Sweet

While video and telephone conferencing are “richer” media than email or text, they are also more cognitively taxing. Human brains are prediction machines, and they must work extra hard to understand gaps, glitches, time lags, and other ambiguities in the interaction. Short, structured video and teleconferences can help keep parties engaged and at their best.

Leading Virtual Negotiations

There’s no substitute for the richness of negotiating in a face-to-face environment. But as we navigate this stressful period of social distancing, it’s useful to remember that digital communication tools and media can make negotiations more efficient but need to be used properly.

1. Connect at the Outset

Take a few minutes to schmooze or make small talk at the start of a meeting and before negotiating. Starting a negotiation with humor leads to better outcomes and better feelings between parties. Particularly in the stressful world of quarantines, making a personal connection can have a powerful effect on what follows.

TIP. Consider the Purpose, Benefit, Check from Craig Wortmann, Kellogg professor and CEO of the Sales Engine

2. Set Constraints

Video conferences can often have interruptions when parties join at different times, and they tend to carry on although the objectives of the meeting have been met. After taking time to connect, make sure to quickly clarify the meeting purpose and the time to be committed. If a key party will have to leave early, for example, reshape the agenda as needed at the outset.

TIP. Consider office setups and advice from Techcrunch and the NYTimes.

3. Prepare your Office for Video

Make your office and background professional. Fake or staged backgrounds may create a negative perception and a perception that you’re hiding something. Something as simple as allowing a few into your home is important to reinforce your trustworthiness, especially when asking the seller to share everything about the business they’ve built and possibly their fears and ambitions.

4. Look in the Mirror

M&A is a people business and people desire connection and ALL people harbor insecurities. Evidence suggests that seeing yourself during a video call tends to increase self-consciousness and self-criticism. Particularly if you already have these tendencies, you might want to turn off the self-view when video conferencing.

5. Do Not Disturb

There are many stories of private material leaks, or messages being shared during presentations. Whoever shares their screen, close all unrelated applications and turn on “Do Not Disturb” to avoid messages from appearing.  Consider using different computers (1)for video conferences and screen sharing and (2) a separate computer or your phone to chat or text with teammates.