Balancing values and organisational interests amid negotiations
Rosemary Gallagher on how advisors should rely on the better side of their natures when sealing the deal with clients.
Values and ethics are an important part of business, and if trust can be established between various parties negotiating a deal, commentators agree that the chances of a successful outcome can be increased.
A report published last month by Harvard Law School looked at How to Balance Your Own Values in Negotiation. It says that some of the toughest ethical problems for managers are conflicts of interest that require them to balance their own values with the interests of their organisations.
It states: “In the heat of the moment, it isn’t always easy to maintain your personal ethical priorities. That’s why the best negotiation strategy is to ensure that your expectations are aligned with those of your company from the outset.”
And while it’s not new to talk about values in business, they are more prominent than ever before with people expecting greater levels of transparency. And with professionals being bound by various codes of conduct, values and ethics are taken very seriously.
So how do values develop over time, and how do they affect dealmaking in Scotland?
Brian McMurray, partner and head of equity funding at Anderson Anderson & Brown (AAB), says that while individuals will have their own values, those of the wider firm must take priority.
He says: “We’re a big business and have built up a reputation over the years which is important to maintain. One of our core values is looking to always add value in a deal or transaction. You have to remember what is in the client’s best interests.”
There can be times that the advisor’s values don’t neccessarily match that of clients, and that is when compromise comes into play – but only to a certain extent.
“We wouldn’t compromise our core values as that would be a short-term approach and we’re in business for the long term,” says McMurray.
“It’s important to establish at the outset whether a client has different values to you.
“Trust is the most important thing. If you lose trust in a deal, it’s very difficult to get that back. I have seen deals where behaviours have led to trust being lost and this has left no appetite to do a deal. In most cases, this has happened where a working relationship is required between the parties post-deal.”
Values also come into consideration between advisors when deals are being negotiated. McMurray says: “The Scottish deals market is relatively close and most advisors know each other. Everyone tends to have professionalism and similar core values.
“But, I have seen transactions in the past when you have advisors who just don’t get on and that can cause all kind of problems. You have to get everyone in a room and remind them what the objective is for the client.
“And different cultures value things differently. In the UK we have a very professional and ethical approach, but there are other parts of the world that don’t prioritise this as much. It’s important to have that awareness and not allow that to compromise our values.”
Core values have a role to play in whether a deal will be completed, as clashes can stop it getting over the line. “Having shared core values among all the parties involved will always give a greater chance of success in a deal,” says McMurray.
Derek Stroud, a partner at Brodies, says that its people are guided by a unique set of values that determine how colleagues and clients work together.
These values are: the courage to think differently; character from creativity, innovation and openly sharing different views; caring, and being collegiate and
collaborative, with relationships built on trust.
“At Brodies, our values guide our behaviours and represent who we are and how we work,” says Stroud. “We reviewed our values as part of a brand refresh which launched last summer. We spent a lot of time listening to our clients and colleagues to refine our core values.”
He believes that each of those values has a role to play in successfully negotiating a deal. He says that as negotiation is not all one-way, courage is required to think through a problem from a different angle. Character lets people be creative and innovative to reach a solution.
Stroud adds: “The fact that we really care about what we do, and that we demonstrate that, gives our clients the comfort they need to trust our advice in the midst of a negotiation. We are collegiate and understand that dealmaking is about more than the transaction and can have an impact on many areas of a client’s business.
“In terms of collaboration, a client needs to trust and work well with their team of advisors. That trust must be earned, and we work hard with our clients to do that and to build a good relationship generally.
“It must also be remembered that there are two sides to each negotiation. Ultimately, each party is looking to do a deal and will usually have to reach some form of compromise at some stage. It is far easier to achieve that if there is an element of trust and respect among the advisors on both sides.”
He says that there is always a risk of clashes during negotiations, but it should be remembered this is the client’s deal not the advisor’s, so compromise can be required.
“We must rise above any clash in values with those of the others. It is important to remain professional and focussed on the issues relating to the deal,” Stroud says.
“Common values will certainly make the negotiation more efficient and perhaps less likely to fail.
“However, ultimately, if there is a deal to be done and the parties wish to complete it, then the deal should happen irrespective of a lack of common values.
“Having said that, in deals where there is a continuing interest or relationship among the different parties, for example in a joint venture or an investment by one party in another party, then a commonality in values becomes all the more important, and may well be essential in certain circumstances.”
Giving examples of how Brodies’ values have come to the fore in negotiations, Stroud cites the law firm’s ability to develop groundbreaking contractual structures in the oil and gas sector; its expertise in co-ordinating input from local counsel around the world to deliver global deals in multiple jurisdictions, and ensuring that its specialists collaborate to deliver advice.