Modern Deals Series Part 6: Negotiation
This article is part 6 of our Modern Deals series. Ansarada Deals™ supports total transaction management throughout the entire deal lifecycle. Get the upper hand in negotiations with unparalleled visibility and insights into bidder motives.
By AnsaradaWed Jul 07 2021Mergers and acquisitions, Due diligence and dealmaking, Advisors
As most dealmakers would tell you, negotiation is a complex art form, requiring mutual trust, communication and the managing of expectations. A strategic approach to negotiation requires more than a reactive response to the other party’s plays.
Anxiety can influence a high-stake negotiation by ‘leading dealmakers to focus on (perceived) threats rather than identify all possible forms of leverage and think expansively about options. When that happens, negotiators are more likely to make poor tactical choices’ (Harvard Business Review).
To unlock more value, dealmakers need to be confident they are armed with all the relevant information and use data to drive decision-making, so they can strike the ideal balance of a high sale price with a swift and timely close.
Knowing which information to reveal – and at which stage of the due diligence process – is a careful balancing act when there’s a risk that competitive rivals or tyre kickers could still be in the mix.
The ensuing back-and-forth to get a full and clear picture of all the information relevant to the deal can blow out timelines and have a negative impact on the value of the deal – or even the deal itself.
Collating different metrics and interpreting their results will help you make faster and more effective decisions in response to bidder behaviour, including rises or falls in interest, to keep the deal progressing.
The AI Bidder Engagement Score is a game-changer for negotiators. It’s the first AI tool of its kind for M&A transactions, allowing the sell-side to predict who the most likely winning bidder is by day 7 of a transaction – and with up to 97% accuracy. It allows you to validate your gut instinct with real data while there’s still time to impact the outcome.
When activated, the score arrives in your inbox weekly as a percentage, with anything over 50% representing an engaged bidder. The algorithm takes into account more than 57 separate attributes, including logins, document views and time spent viewing documents. You’ll see the trend week on week to see if they are improving or not, and the top 3 factors that are impacting their score.
Being able to see these engagement levels gives you unmatched insight into bidder intent and accordingly, the upper hand in negotiations.
“Virtual negotiations can be a challenge; you don’t have that face-to-face element and it can be difficult to read body language. You can do an entire deal end-to-end without seeing people in person, which is completely new for us.” - Arun Varughese, head of TMT and financial sponsors at Rand Merchant Bank
2. Establish trust with clients and bidders
“Trust is an important factor; if your system or process is too complicated, the client will struggle. But with a trustworthy system that’s easy to operate, to access, to load or pull data — that definitely plays a role in building trust. Ansarada is a technology platform we can trust. Information is readily available, so you can be prepared when the deal starts. You don’t have to worry, and you know you don’t have to worry.” - John Holtzhausen, CEO and Managing Director of PSG Capital
3. Centralize data to monitor engagement
“By enabling the buy-side to view key documents in a single, secure location, we can get visibility over what’s been opened, what’s been viewed, and how engaged our potential bidders are from the get-go.” - Jon Newbery , Head of Corporate Finance & Projects, Downer EDI
4. Keep an eye on the time-wasters
“Being able to see the trends week on week to assess whether they are improving helps us eliminate time wasted on disengaged bidders, maintain competitive tension, and focus our efforts on the ones most likely to convert, so we can get the deal done faster.” - Jacinta Martino, Corporate Development Administrator, Galaxy Resources Limited
5. Use AI to predict the winners
“The AI Bidder Engagement Score that I've seen in transaction processes I've been involved in has actually been very effective in predicting who the future successful party in the [bidding] process will be. It's had an almost 100% hit rate.” - Julian Garratt, Director at Perella Weinberg Partners
Armed with all the information to act quickly – including that which the buy-side isn’t always giving away freely – negotiators can make stronger decisions and strike the balance between a high-value outcome and a timely agreement that works for all parties.
Anxiety can influence a high-stake negotiation by ‘leading dealmakers to focus on (perceived) threats rather than identify all possible forms of leverage and think expansively about options. When that happens, negotiators are more likely to make poor tactical choices’ (Harvard Business Review).
To unlock more value, dealmakers need to be confident they are armed with all the relevant information and use data to drive decision-making, so they can strike the ideal balance of a high sale price with a swift and timely close.
Negotiation: The old way
Using legacy data rooms, negotiators get minimal insight into the bidder objectives. Understanding the other party’s motives and level of interest is purely guesswork.Knowing which information to reveal – and at which stage of the due diligence process – is a careful balancing act when there’s a risk that competitive rivals or tyre kickers could still be in the mix.
The ensuing back-and-forth to get a full and clear picture of all the information relevant to the deal can blow out timelines and have a negative impact on the value of the deal – or even the deal itself.
Negotiation: The modern way
In a modern Deals platform, sellers can use granular security tools and smart redaction functionality to hold their cards close. You can easily choose who gets to see what, when, so you can keep the deal moving while you assess your bidders’ intent.Collating different metrics and interpreting their results will help you make faster and more effective decisions in response to bidder behaviour, including rises or falls in interest, to keep the deal progressing.
The AI Bidder Engagement Score is a game-changer for negotiators. It’s the first AI tool of its kind for M&A transactions, allowing the sell-side to predict who the most likely winning bidder is by day 7 of a transaction – and with up to 97% accuracy. It allows you to validate your gut instinct with real data while there’s still time to impact the outcome.
When activated, the score arrives in your inbox weekly as a percentage, with anything over 50% representing an engaged bidder. The algorithm takes into account more than 57 separate attributes, including logins, document views and time spent viewing documents. You’ll see the trend week on week to see if they are improving or not, and the top 3 factors that are impacting their score.
Being able to see these engagement levels gives you unmatched insight into bidder intent and accordingly, the upper hand in negotiations.
5 tips on getting the upper hand in negotiations
1. Adapt to virtual negotiations“Virtual negotiations can be a challenge; you don’t have that face-to-face element and it can be difficult to read body language. You can do an entire deal end-to-end without seeing people in person, which is completely new for us.” - Arun Varughese, head of TMT and financial sponsors at Rand Merchant Bank
2. Establish trust with clients and bidders
“Trust is an important factor; if your system or process is too complicated, the client will struggle. But with a trustworthy system that’s easy to operate, to access, to load or pull data — that definitely plays a role in building trust. Ansarada is a technology platform we can trust. Information is readily available, so you can be prepared when the deal starts. You don’t have to worry, and you know you don’t have to worry.” - John Holtzhausen, CEO and Managing Director of PSG Capital
3. Centralize data to monitor engagement
“By enabling the buy-side to view key documents in a single, secure location, we can get visibility over what’s been opened, what’s been viewed, and how engaged our potential bidders are from the get-go.” - Jon Newbery , Head of Corporate Finance & Projects, Downer EDI
4. Keep an eye on the time-wasters
“Being able to see the trends week on week to assess whether they are improving helps us eliminate time wasted on disengaged bidders, maintain competitive tension, and focus our efforts on the ones most likely to convert, so we can get the deal done faster.” - Jacinta Martino, Corporate Development Administrator, Galaxy Resources Limited
5. Use AI to predict the winners
“The AI Bidder Engagement Score that I've seen in transaction processes I've been involved in has actually been very effective in predicting who the future successful party in the [bidding] process will be. It's had an almost 100% hit rate.” - Julian Garratt, Director at Perella Weinberg Partners
Virtual negotiation made simple
The shift from in-person deals to online has made it harder to build relationships and rapport – especially across borders.Armed with all the information to act quickly – including that which the buy-side isn’t always giving away freely – negotiators can make stronger decisions and strike the balance between a high-value outcome and a timely agreement that works for all parties.
Modern deals require modern solutions
Ansarada Deals™ is a total transaction management solution amplifying how dealmakers and business leaders achieve outcomes, across each stage of the deal lifecycle. Advisors can now get a quote and a free data room, with no usage fees until your deal goes live by adding an external guest user. Stay tuned for the next part of our Modern Deals Series: Closing with Ansarada Deals™.
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