I remember attending manager training as an auditor at Deloitte early on in my career. One of the sessions was on negotiations. Split up into teams, we had to negotiate over some resource produced on a plot of land. The teams that successfully reached agreement realized that the two sides wanted different, complementary aspects of the resource (my team wasn’t one of them).

It wasn’t until 5 or 6 years later when I actually had to put my negotiation skills to the test in a real life situation. As a newbie investment banker, six months into the job, I had to negotiate terms with a borrower – a managing director at Credit Suisse First Boston. I’ll never forget that conversation. He wanted to negotiate with a more senior member of my team – his former colleague. I said, calmly and confidently to my client, that his former colleague worked for a different part of the bank and to get this deal done, he had to negotiate with me. I gained his respect, he never asked for his former colleague again, and he and I became friends for a time.

I learned how to negotiate deals through practice. Even though I’m not trained as a lawyer, I read every legal agreement, asked questions, sought good advice from my legal counsel, and made a point of understanding what the agreements said. I wanted to know why something was in an agreement and what effect it had.

In negotiations, information is powerful. (click to tweet)

I always want to know as much as possible about what the other party is thinking about and wants. The less I know, the more asymmetric the negotiation is.

Photo credit: Jessica Pautsch, CEO Mesh, a Pique Fund portfolio company.

I was honoured to be invited to participate in a role-play, hosted by the Vancouver office of law firm Borden Ladner Gervais and Spring. As part of their Driven By Women line of services, the event was designed to share negotiation tactics, skills, and specific knowledge for entrepreneurs raising capital from early-stage venture investors. Hosted by Julie Bogle, I played the part of a seed fund manager (a stretch, I know), negotiating with the legal advisor to a women-led tech venture, portrayed by Melinda Park (whose role-playing skills were phenomenal!) Prior to the role-play, I facilitated a conversation with one half of the attendees, with our investor hats on. I was impressed by the mindset and knowledge already present in the room. Attendees were keen to ask due diligence questions about growth prospects and were well-prepared to ask about different types of structure, employee options, and Board representation and other governance issues.

I’ve had negotiations come to a standstill on the point of governance (or rather, lack of appropriate governance structures to ensure that investors are represented within the venture, especially in situations where significant amounts of capital are being invested) and on disagreements about valuation. If you want to improve your negotiation skills, my advice is:

  1. Listen. Like the lesson I learned as an audit manager, sometimes what the other party wants is something you’re willing to exchange. Not every negotiation is rooted in conflict!
  2. Practice.
  3. Get good legal advice from people who will be a trusted partner, just like being part of your team.
  4. Understand the legal agreements, read them, and ask your lawyer questions, so that you understand what the terms mean and do. If you understand it, you’re in a better position to negotiate it.
  5. Know what your deal breakers are and how much room there is to negotiate.

Featured image photo credit: Julie Bogle, BLG

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For more impact investing resources and tools, check out Integrated Investing: Impact Investing with Head, Heart, Body, and Soul, available at all major online book retailers.

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