The Thing About Deals
The more complex the transaction, the more difficult it is for everyone to emerge with everything on their wish list. That’s just the nature of the beast.
Political negotiations illustrate this perfectly and very publicly. You have dueling parties, fueled by competing ideologies, each proposing what they believe to be in the best interests of their constituents. (Yes, I know that politicians are driven more by what they think their voters will want to hear versus what they need to hear, but humor me for a bit.)
They battle back and forth, each staking their claim for “what’s right”. And then, at the eleventh hour, this party gives a little of this while that one gives a little of that, and a compromise is reached (assuming there isn’t a material power imbalance in which case all bets are off). When the deal is announced, each party steps up to their respective mikes proclaiming victory.
But did everyone get what they wanted? No, they didn’t. Would this be the deal they would have imagined if they had to clean-sheet the deal from scratch? No, they likely not. But that’s not actually the point - in fact, those are the wrong questions to ask.
Better to ask: did we move the ball forward? Are we generally better off today, with this deal, than we would have been, without it? And, of course, we need to do this without our ideological lenses and personal filters or biases. (And we also need to assume there are no overt or overbearing bad actors at play on either side.)
Many business transactions work on the same basis. When two parties know they want to work with each other and a deal has to be struck, there’s a level of give and take that takes place (again, assuming one side doesn’t have an outsized influence in some way). The question for both sides is - are we better off with this deal the way it is structured, or are we not? As opposed to did I get absolutely everything I wanted, because the answer almost always is going to be no. (Again, assuming there are no overt or overbearing bad actors at work on either side.)
That can be hard for many to accept, and it can lead to posturing and taking stances at extremes on the basis that the give and take will end up where that party would want it to be. (This doesn’t usually work unless there is a material asymmetry of information.)
But the better dealmakers recognize that, in any material deal, everyone should win. They, therefore, work with trust and with positive intent. They are ready to give on aspects that are of value to the other party so long as they gain on those that are of value to them. At the end of the day, the question they want to be able to answer is, are we all better off with the deal, than where we were before, without it.
Look, deals aren't perfect. Rarely does everyone get everything they want in a deal.
But they do represent a step forward. If it’s perfection that you seek through them, then you'll never be satisfied.
