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Published on May 28, 2013 in News, North America

Negotiating Transactions in the United States

Recently, we published blogs on Negotiating a Transaction in Germany and Negotiating Transactions in France. Subsequently, we’ve received a number of inquiries from our readers asking us to provide some insights into negotiating transactions in the United States. Since our firm has had quite a bit of experience assisting companies negotiate with the sane and un-sane in consummating a transaction, we wanted to give you what we feel are the characteristics for negotiating transactions in the United States.

Characteristics of American Negotiations

1.    We tend to be businesslike. Americans are purpose-driven. We have an agenda and we have an objective. We tend to be positive and unemotional as we pursue a well-planned course designed to help us attain our goals. We don’t shoot from the hip, but like to chart a path and stick to it. Yet we retain the flexibility to change direction if necessary in order to accomplish our objectives. In maintaining our businesslike approach we tend to be very focused on the end game. Therefore, we’re less prone to rhetoric and making grand statements that sound good, but are of little consequence. We tend to stay away from small talk and discussions which stray from our focused objective and, instead, outline a course of action which we expect to modify as necessary in getting the other side to accept our premises and viewpoint. Since we tend to be objective rather than subjective, we provide the other side with the data necessary to support our positions while all the while maintaining our eye on the goal line and what actions are required in order for us to accomplish our objectives. American businessmen tend to be well prepared, pragmatic, calm, persistent, and goal oriented.

2.    We tend to view negotiations as joint problem solving. Americans generally perceive that “we’re both in the boat together” and therefore need to navigate the boat around various obstacles in order for both sides to reach the shore on the other side together. Therefore, both sides need to jointly resolve differences and reach agreement in a “win-win” scenario. In accomplishing this, Americans generally don’t “skip over the issue” and come back to it later. Instead, we try and jointly resolve issues as they occur. We also try and stay clear from dictating terms as to how we want an issue resolved, as this generally leads to a lack of compromise and a rejection of our intended solution. And, although Americans are competitive by nature, we generally put this trait behind us as we try and quickly solve issues that can de-rail the negotiating process or prevent us from moving forward.

businessmen-shaking-hands 3.    We negotiate according to our own set of values. American negotiators can tend, at times, to be moralistic and act according to one’s inherent sense of values. Our sense of right and wrong. Our sense of fair play. In negotiating according to our internal beliefs we can be idealistic and, at times, passionately express these beliefs in the negotiating process. Therefore, we frequently see our moral values set the framework for our negotiating style and demeanor. Whether or not the other side shares these beliefs, we’ll still try to win them over to our side by having them accept our values and beliefs. This process, however, sometimes goes astray when the other side also has a firm set of values to which they adhere. In this event the evangelism expressed by both sides will have to be placed on the back burner as they jointly try and resolve the issues and move forward.

 4.    We prefer directness and bluntness. Americans dislike vagary. We also like to get to the point. We’re direct and we expect the other side to reciprocate and be frank and straightforward with us, otherwise we’ll never reach our goal or it will take us substantially longer to get there. However, some foreign negotiators may find this directness to be rude and prefer a more subtle easing into it approach in negotiations. On the other hand, we frequently find American negotiators to be especially blunt and direct when the other side is evasive or ambiguous. In this event the direct approach helps get everyone back on track and focused on the issues in front of them. It’s important to ensure that directness and bluntness don’t cross the line into rudeness and arrogance, traits that can de-rail the negotiating process and cause animosity between both sides. It’s also important that these traits don’t lead to confrontation, which is obviously counterproductive. Therefore, in negotiating with those who may have sensitivities to directness and bluntness, we advocate toning it down to make the other side feels like they have a voice in this process and that they’re not being steamrolled.

 5.    We tend to be ambivalent. Ambivalence is a state of having simultaneous, conflicting feelings. When we say Americans tend to be ambivalent, we mean that on the one hand Americans want to sit down and work out the issues in a businesslike manner which hopefully will lead to an agreement. On the other hand, we usually have a flip side, or another set of values, which may directly conflict with our businesslike approach. Sometimes that’s due to the attitude, temperament, and moralistic outlook of the other side not being aligned with our view of the world and our projected course of action. The end result of this state of ambivalence is that, even as these traits coexist within our personality and one side is more often kept in check, one or more of these traits will sometimes escape and manifest itself in the negotiating process. For example, we may be businesslike but also impatient and pushy in getting the other side of move forward; we may be cordial, but also blunt; or we may give a concise opinion but go on to lecture the other side on the merits of a position. In other words, Americans frequently use both sides of the coin in the negotiating process.

 6.    We tend to be legalistic. Americans tend to follow the letter of the law. We like contracts that are binding and that memorialize exactly what’s been negotiated. We don’t like to be told: we’ll work it out if that happens or we’ll have a gentlemen’s agreement between us. That doesn’t work. Instead, our attorneys draw up long and involved contracts that try and cover every eventuality. No vagaries, no guesswork. We want a concise written agreement between parties at the end of the negotiating process so that both sides can strictly adhere to its terms. Of course, some countries such as China, where enforcement action against an infringing party is difficult, only adhere to the contract when it’s to their benefit. When it’s not, they seem to say come and get us. However, in the Western world, this is not the case and most parties feel bound by the terms of the contract. Although American companies sometimes take heat for long and involved contracts, they’re actually worth their weight in gold when they cover an eventuality that you never expected to occur and now don’t have to go to court or negotiate a course of action with the other party.

 7.    We tend to be judgmental. America is a country of individualists. As such, we tend to demonstrate more personal initiative, form our own opinions, and largely draw our own conclusions. In other words, we’re judgmental. These judgments, especially in the form of initial impressions, can form the basis for prejudices in our negotiations. For example, if we have antipathy towards someone, that prejudice may manifest itself in believing that the person we’re negotiating with is not being truthful or that he’s unwilling to compromise even though he knows what we’re saying is true. Neither of which may be the case. Being judgmental clouds the objectivity of the negotiating process and very often leads to faulty decisions based on inaccurate assessments. Consequently, it’s best to set aside our individualistic tendencies and wipe the slate clean of biases and antipathy before commencing the negotiating process.

 8.    We tend to use inducements. In the negotiating process, Americans tend to favor inducements over compromise. Compromise makes us uneasy. A compromise generally means that, in order to close the transaction, we had to give up something of value. In addition, many Americans feel that compromise is a sign of weakness, and we’re not a nation that likes weak negotiators. Inducements, on the other hand, has us provide something of value to the other side. It may be something that we don’t value as highly as they do or something that we have in abundance. In addition, inducements fit well with our businesslike approach in negotiating. A quid pro quo. You give me this and I’ll give you that. We’re making an offer to provide something of value, financial or otherwise, in exchange for something we value, whether it’s something physical, monetary, or a contract term. For whatever the reason, American negotiators favor inducements over compromise.

 9.    We tend to be impatient. American negotiators are generally known to have less patience than many of their foreign counterparts. We’re a nation that wants instant gratification. Therefore, Americans tend to negotiate quickly. We tend to break down the important issues as we see them, negotiate each separately, and are usually unwilling to revisit issues that have been previously discussed. We’re monochromic. We successfully complete one task and then go on to the next. Not everyone we negotiate with is monochromic. Some are polychromic, meaning that they’re more interested in social interaction rather than completion of the task. They might work on a task for a period of time and then, when they feel the urge, will simply move on to another task before the previous task is complete. This tends to extend the negotiating process and cause a great deal of stress. Americans generally tend to want to conclude negotiations on their first visit. If negotiations can’t be concluded during their visit, they’ll quickly follow-up with e-mails and phone calls, moving forward based on the relationship they established during their visit. We also don’t like anything that interferes with the negotiation process. Therefore, interruptions and distractions that take away from our focus will generally provoke a quick response. In addition, when negotiations take too long, we begin to consider alternatives that save time. We’re a nation that’s monochromic and impatient. It’s just who we are.

 10.    Regional differences affect our negotiating style. Americans negotiate differently based on regional differences and cultural backgrounds. Negotiators from the western portion of the United States tend to be more open minded, leisurely in their negotiating style, and more naïve than negotiators who reside in other areas of the country. Those who are from the Midwest tend to be more risk averse, formal, and follow tradition. Negotiators who reside in the northeast tend to be more tolerant, especially if they’re from big cities. Those who reside in the southern portions of the U.S. tend to be more competitive, aggressive, and think more narrowly than other negotiators.

 11.     We tend to respect achievements rather than one’s pedigree. In many areas of the world a great deal of importance is placed on one’s family background and the school one attended. Some feel that a person that’s attended a prestigious center of learning, and has a storied family name, will be better equipped to be successful in business. Americans, on the other hand, take a different position. American’s are individualistic and give their respect to those who have demonstrated achievements, irrespective of their family name or school. Therefore, American negotiators sometimes differ substantially from their counterparts in other areas of the world. If an American negotiator has a demonstrated record of achievements, then he’s generally considered the right person for the job.

 12.    We have a bottom line. Americans believe in negotiations as a means of achieving their goals. However, most Americans have a bottom line. They’ll take a firm position and go no further. Generally, that position is a price change of between 20% and 30% from the other side’s initial offer. If it’s outside of that range, an American negotiator will usually feel that the other side is acting in bad faith. Both sides want to have a win-win and consummate a transaction that provides value to each party. However, there are economic realities that sometimes make a win-win scenarios difficult to attain. Consequently, it’s better to field price expectations early in the negotiating process so that you don’t get to the end only to find out that you don’t have a deal.

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