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What to do when the deal goes bad
YOU are just about to seal a significant contract, when the customer gets cold feet. Your counterpart in a collaborative partnership that you have been negotiating for over a year suddenly pulls out. You've been trying to onboard a new supplier, when your main competitor snaps him up. We've all had deals that were seemingly in the bag, unexpectedly take a turn for the worse. What can you do to recover from this mishap?
Keep communication channels open
When handling any project, keep open and regular communications with your boss, team mates, and all colleagues who could be affected by the project. It is never pleasant to let others know that the deal you have been working on has fallen through. However, if you keep the communication channels open, and regularly update everyone on the key steps of the project along the way, then should the deal go sour, they will not be totally unprepared. This allows your colleagues to better manage any possible implications that the failed deal may have on their work.
Too often when a project begins to fail, everyone involved makes a speedy exit and refuses to take responsibility. No one wants to take the blame for a failed project. If you are in charge of securing the deal, do not make excuses. Step up and take ownership. At the same time, be aware that you cannot be responsible for everything and sometimes, despite your best efforts, a project is going to fall through. A sensible explanation of why the deal went sour is a good idea - but don't let it become a whining self-absolution. That will only make you seem guilty. Having a more positive mindset can help you make it through even the toughest deals.
When handling a deal, there is always a negotiation phase. That's when most people start to sweat. Before you begin negotiations, write down three things: first, the outcome that you would like to achieve; second, the outcome that you reasonably expect to get; third, the point at which you will walk away from the deal. Once you've identified these three things, you can negotiate easier, allowing yourself some room to maneuver.
I was once dealing with a tough seller. We were trying to buy his business. Negotiations had already dragged on for a long time. One of the decisions I made was that if we could not complete the negotiations by a specific deadline, we would walk away. The deadline came and still the vendor would not accept our offer.
So I walked. I recall that my manager actually cried as we left that meeting, because he was sure the deal was off. Within two hours, the vendor gave us a call saying that they would accept our offer. And although my walking away from this deal was sincere and not a bluff strategy to get the other business to agree to our terms, in this case, it closed the deal.
Know when to pull the plug
Once you know that the deal is not going to work, have the courage to pull the plug - the earlier the better to avoid further wastage of time and resources. Salvage whatever you can, as most projects will have parts that are still of value. A collaborative research project might result in some intellectual property that could be re-purposed elsewhere.
Many businesses organising events have been hit hard by Covid-19. You may be able to negotiate your down payment on the venue or some aspect of the event such as catering on the basis that you agree with your supplier to organise a similar event after the crisis is over. But in the process do not mistreat your supplier. We are seeing examples of hard-nosed business becoming just a little too hard-nosed. One of the great lessons to emerge from coronavirus is that we are thinking too short term, too "cash today", too greedy for growth. An efficient world is not one that successfully abuses everyone else for our own benefit but one that ensures reasonable reward for all for diligent effort.
Learn from the experience
Use this experience to think over what went wrong and what could have been done differently. When I was building Cerebos Pacific Ltd, anytime there was a failed project, I would call a meeting with all the people involved in the project, as well as well as people who could be negatively impacted by the project's failure. I would explain that there were three reasons for this meeting. First we all wanted to know what went wrong. I always took responsibility for any failure on our part myself.
Second, I wanted to know what we could learn and salvage from the event. I tried to give the voice to this to the people who had been running the project. It was their opportunity to show that the project had not been in vain. Third, I wanted ideas for new projects to replace this one. This gave everyone in the meeting a chance to demonstrate their agility of mind and enthusiasm for the future. Turning a negative into a positive is never easy. We did so well, I think.
You may not be able to change the outcome of a deal that has gone bad but by reflecting on it and using the wrap-up skilfully you can ensure your team emerges stronger and better equipped to handle the next acquisition or development scenario.
And believe me, there will always be another one down the road.
- The writer is founder-mentor, Terrific Mentors International