“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

Advisor says: An associate in my office and I have been having ongoing, informal discussions about the possibility of merging our practices. We can see many advantages, such as shared costs, additional resources and backup support. I also foresee potential for my succession plan because my associate is 15 years younger than I am.

We now have reached the stage at which we want to formalize a partnership agreement with specifics of who does what, for how much, etc. Here is the potential problem: while we like and respect each other, we know we both are more than a little bull-headed and opinionated. We have developed a way of communicating with each other that people looking in from the outside might not think is the best way to begin a joint venture. I know we each have strong positions on a number of issues, so our negotiations will be intense and, perhaps, loud, but that is just us being who we are.

All that said, this merger is important to me and I don’t want to blow the opportunity. How do I win my battles without losing the war?

Coach says: Don’t take offence, but I find your thoughts amusing – and a bit scary – that you already think your partnership will be a raucous one, yet you want to proceed with a merger. Not only are there a large number of issues that should be settled prior to making the leap, but many more will pop up throughout the relationship and they will cause strain. However, I admit I have seen other situations in which I had to ask two partners: “How have you guys gotten along so well for so many years? You are always arguing!”

The response always is the same: “It is just our way of communicating.”

The good news is that you probably are a good negotiator already. As an entrepreneur, you undoubtedly have had to make deals with a number of people regarding your business. As a financial advisor, you probably have had to bargain with clients from time to time to get them to act on your advice. If you have staff, you certainly have had to “help” them meet their obligations to you.

Although your negotiating style sounds adversarial, it works for you, so I am not going to suggest you act in a way that is unnatural to you. Libraries, both bricks-and-mortar and online, are filled with books and how-to guides on developing negotiating skills.

I am not going to try to compete with those resources and, in fact, I encourage you to do a little research and find other references that you feel reflect your personal style.

However, there are some basic things I try to keep in mind when I am entering a deal-making situation. Hopefully, these will help to shape your discussions initially and throughout your partnership:

know your parameters. In my view, the foundation of successful negotiation is knowing what you want to achieve and what you are willing to accept. The best way I have found to do that is to begin by asking yourself: “What is the alternative?”

Your underlying reason for negotiating is to produce an outcome that is better than what you can achieve without negotiating. Therefore, you need to know what you want those future results to be. For example, in your situation, you might conclude that unless you partner with your associate, you will have an uncertain succession plan. If certainty regarding your eventual transition from your business is critical to you, that represents part of the standard against which you should measure any proposed agreement.

understand your counterpart. Having considered your own perspective, turn next to the person on the other side of the table – in this case, your associate. What are the needs and objectives that are leading him or her to want to collaborate with you? To achieve that understanding, talk to your associate several times to get his or her genuine perspective on the benefits of your partnership.

Listen carefully to what your associate doesn’t say, as well. If your idea of the value of joining forces is far from his or hers, you may not have a good basis for negotiating a deal that is mutually beneficial or likely to endure the challenges that inevitably come with every partnership.

Set your minimums. List the critical issues that you want to address and decide on your bottom line – the lowest point you will accept in the deal – regarding those key matters. For example, “I won’t accept anything less than a 70/30 split on any business I bring to the partnership.”

Identify wants and needs. Differentiate between what you want to achieve (your objectives) and what you absolutely need to achieve (your bottom line). Be sure you appreciate the distance between the two. If your wants and needs are close, these are the points on which you will negotiate the hardest. A large gap between your objectives and your bottom line indicates there are less important issues on which you can concede to some extent in order to achieve outcomes more critical to you.

Aim high. Decide on your starting position. Open with the most ambitious proposal you think you can get away with without scuttling the negotiations right from the start. This gives you room to negotiate.

Start small. Begin with the easy stuff by discussing a point on which you are pretty confident you already agree. This strategy gives both of you something to which you can readily say “yes”; an agreement to kick off the negotiations on a positive note.

Make a list. Plan the sequence in which you are going to present your proposals. Make your arguments strategically, building on earlier agreements. Stay calm and avoid going immediately to your bottom line, even if you are frustrated. Digging in your heels on an issue is tempting if you had to give up more than you hoped on the previous one. Tit-for-tat confrontations do not make for good negotiations.

Do your homework. Be prepared with information, facts, comparisons, etc. You do not want to appear uninformed or unreasonably aggressive without something to support your position. Try to put your arguments into a context that your associate can appreciate. Feed back to him or her his/her own needs. For example, “You have said you don’t want to be tied up managing the business. That is something I am willing to take on, but I need to be compensated for my time in some way.”

Elect to receive. If possible, have your associate make his or her offers first. This position allows you to fashion your response based on what he or she has proposed. I have been surprised more than once when the person with whom I am negotiating opens the discussion at a point more favourable to me than I expected.

Know when to close the deal. If your associate is ready to proceed on terms that are acceptable to you, stop negotiating! Make confirming your agreement easy by having everything required to complete the deal ready to implement as soon as possible.

George Hartman is CEO of Market Logics Inc. in Toronto. Send questions and comments regarding this column to george@marketlogics.ca. George’s practice-management videos can be viewed on www.investmentexecutive.com.

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