Business negotiations are often seen as a battle of wills, with each party trying to gain the upper hand and come out on top in a battle of positional bargaining. However, as we have examined in prior articles, deploying strategic dialogue can have a significant, positive impact on negotiations.
Digging into the topic of dialogue even further, our professionals have observed that deploying thoughtful questions and strategically using silence can be surprisingly effective in achieving better negotiation outcomes.
Thoughtful Questions
“Be a good listener,” Dale Carnegie advised in his classic book, How to Win Friends and Influence People. “Ask questions the other person will enjoy answering.” While negotiators may not be trying to win friends in a negotiation, they are certainly trying to influence people, and asking questions is an important strategy.
Negotiations are often high-stakes, anxiety-inducing environments. To prepare for this kind of engagement, people tend to write down or go over in their head what they want to say, the statements they want to drive home, and the positions they want to reiterate. However, with the focus on what they want to say, negotiators can sometimes miss the questions they need to ask to further probe the other party’s interest and possibly expand the context of the negotiations.
Asking thoughtful, open-ended questions that encourage the other party to share information and perspectives allows negotiators to gain a deeper understanding of the issues at hand and identify potential areas of alignment and compromise. In addition, asking questions can create a sense of engagement and collaboration, which can lead to more productive discussions. Most counterparties will appreciate, and even enjoy, the opportunity to answer thoughtful questions that seek to clarify their interest and position.
Highlighting this concept, we once had a potential buyer for a company where there was little apparent strategic reason for their interest in the business. We might have assumed they were not going to be aggressive in their effort to buy the business and the seller could have been somewhat dismissive toward them. Nevertheless, we started asking questions, seeking to clarify their interest. They shared an extensive amount about their approach to the sector and how it intersected with some unique, hard-to-identify opportunities they were working on, and it became evident they were likely to be a much more aggressive prospective acquirer than anyone had thought. They ultimately closed the acquisition in a win-win transaction for all.
Strategic Silence
The exact origin of the proverb “speech is silver, silence is golden” is hard to nail down. However, its meaning and value are nearly universal, especially in regard to negotiations. The earliest usage of the term in English comes from Thomas Carlyle’s Sartor Resartus, in which he goes on to note that “speech is of time, silence is of eternity.” In negotiations, we have retooled that saying to “speech is of narrowing, silence is of expanding.” Of course, there is a time to get the options on the table and then narrow them. Still, there also are times during negotiations where the strategic use of silence can have significant benefits, especially in regard to expanding options.
Some negotiators feel compelled to fill nearly any silence, fearing that their silence may be perceived as a sign of weakness. However, at strategic junctures in negotiations, sitting with the silence is important. The 70/30 rule of communications would indicate that a negotiator should listen 70% of the time. Measured silence is a great tool to get a counterparty talking and often encourages a counterparty to keep thinking, talking, and sharing information that might expand the scope of the discussions between the two parties.
Silence also is a multifaced negotiation tool. Used correctly, it can be aggressive or peaceful, escalating or de-escalating, or engaging or disengaging. Yet, silence is not just a one-sided, winner-take-all tool. In research led by Jared Curhan, a professor at MIT’s Sloan School of Management, periods of silence helped both parties perform better in negotiations, getting more of what each party wanted. We have seen this in practice, where we have found that silence helps both sides think about the possibilities, the what-ifs, and how the discussions can expand beyond just the obvious topics at hand.
Strategically deployed, silence is a low-risk, high-reward activity. If a negotiator is talking, there is some risk that they might reveal something they had not intended to or may block the disclosure of something that would be helpful to both parties. However, choosing to temporarily remain silent on a topic keeps options open, while leaving the approach open to interpretation by the counterparty in any number of ways that may be advantageous and may provide some time to process the information that has been shared. In fact, we have found that proactively deploying silence as part of a negotiator’s communication cadence allows them to be fully engaged in deep listening, knowing that they will have time to process what is shared, then respond. They don’t box themselves into the bad habit of being a speaker in waiting, focused on what they will say next rather than what is being said. Even a few seconds of silence to process new information can be helpful in the midst of difficult negotiations.
We once advised a client that wanted to acquire a competitor’s business. Before our involvement, the two parties had extensively discussed a very complicated merger structure. Our client did not want to pursue a merger but would if they had to in order to get the deal done. One of the first questions we asked our client was what the other party wanted out of the transaction. They did not know exactly. The desires driving the other party had gotten somewhat lost in the process—if they had ever been known.
We asked that same question of the counterparty in our first meeting with both parties, and the counterparty was somewhat reluctant to answer it for a time. They were concerned that we were out to get them in some way, working an angle. After we sat in uncomfortable silence for a while, they started to explain that the family did not want to sell and wanted instead to get rid of the headache of dealing with their largest supplier who was pushing the counterparty for significant operational changes in their business. After that came to light, the discussions changed immediately from a complicated merger to the acquisition of a line of business, which is the transaction that ultimately got done.
While the examples above are by no means a comprehensive list of the benefits and challenges of using thoughtful questions and strategically deploying silence in negotiations, they are meant to illustrate the opportunities that can exist in moving away from pure positional bargaining. FORVIS Capital Advisors has extensive experience leading middle-market buy-side and sell-side mandates, as well as navigating complex mergers and capital raises.
If you would like more information regarding the strategies and nuances of negotiations in mergers and acquisitions, please reach out to an investment banker at FORVIS Capital Advisors or submit the Contact Us form below. Explore our Investment Banking Services page for additional services.