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Global Marketing - Legal, Tax and Financial  Consulting

Global Marketing - Legale, Tax and Financial  Consulting

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No. 1: Choose a skilled negotiator

You have to take care when selecting the quality of the negotiators that will represent you.
Even if you have successfully cleared the previous phases, the negotiations may completely fail because your company's representative (who, moreover, might be you) does not have the required qualities.To avoid this unfortunate disappointment and improve the likelihood of success, we suggest you to choose someone with the following characteristics:

  • this person should be firm, but diplomatic, smoothing rough edges and set out on new paths when a deadlock is in sight, while never giving in on essential points;
  • this person must know how to listen in order to detect and understand what is essential for the other party, in terms of objectives and resources and from the relationship point of view;
  • this person must be skilled in the various areas addressed and must be experienced in this type of negotiation.
  • If, in addition, a partner speaks a language other than yours, the negotiator must have a sufficient knowledge of this language so that he does not need an interpreter;
  • this person must also have the ability to conclude agreements, not allow discussions to go on forever or get bogged down in details, trying to conclude negotiations at the right time.

The negotiations may be led either directly by the senior manager (if he has a good knowledge of the partner's culture and language) or by intermediaries, if authorisation has been given.
It is strongly advisable for the negotiator to have decision-making power in order to establish his credibility, and to be able to profit from opportunities, without necessarily having to communicate all the details to the management.

No. 2: Establish a confidentiality commitment

Case law acknowledges that negotiators must act in good faith during negotiations. Each party is obligated to inform the other party honestly with accurate information. There is also an obligation not to disclose the secrets of which each party becomes aware during negotiations. The violation of this honesty obligation may be punished and may give rise to the criminal liability of the culpable party.  However, despite this Case Law protection, it is prudent for the parties to sign a mutual confidentiality commitment before starting negotiations. This commitment must stipulate penalties for a failure to comply. The purpose of this agreement is to stop the selected companies from disclosing information that could be commercially disadvantageous. Moreover it offers the advantage of placing the discussions in a formal, rigorous framework. Having said that, this should not lead to an excess of trust., you should not provide too much information unilaterally without receiving just as much information from the other party. This means that negotiations will constantly oscillate between trust and mistrust.
This complexity on managing a relationship may be handled more effectively if your actions are guided by an understanding of the partners' interests. It is more productive to approach the process from the outset with a win/win mentality than a win/lose mentality. Cooperation that excessively promotes one partner (to the detriment of the other) will not last long.

No. 3: Draw up a letter of intent

The letter of intent defines the essential principles and main conditions of the future cooperation. It must be signed by everyone during the initial phases of the negotiations.  “How will decisions be taken? By whom? In what language will the negotiations take place? Where will they take place? ...”. These are all questions that should preferably be resolved once and for all through a written document that enables you to begin the negotiations with peace of mind.

No. 4: Fix shared operational objectives

The partnership's objectives must be defined jointly by the two parties so as to ensure a balance between cooperation and competition, between individual objectives and shared objectives.  These objectives must also be attainable and defined, if possible, in measurable terms whose interpretation is predictable.

No. 5: Specify your resources

  • You must also give an accurate description of the resources that you will use to make this partnership operational, at three levels:
  • the contribution to the cooperation, its scope, and its nature (financial, technical, commercial, etc.);
  • the company's strengths;
  • the weaknesses that it needs to eliminate.

This description will be partially based on the strategic analysis prior to set up the partnership like any first phase, to judge the appropriateness of a partnership. You have to implement this analysis along with the resources available to reach the operational objectives that you have set.

No. 6: Get to know your partner's resources

Familiarising yourself with your partner's strengths, weaknesses, and aspirations, as well as with the resources that he is able to provide, is an undeniable advantage that will enable you to strike a balance between your strengths/weaknesses and those of your partner, thereby ensuring that your resources are complementary. You will collect updated information and you will attempt to compare it with the information received during meetings. In addition, getting to know your partner's mentality, its ways and customs, or, more generally, its culture, is something to be undertaken with attention and respect, to promote a climate that is propitious to mutual trust. Thus, to maximise the partnership's chance of success, you should make sure that there is complementarity and balance between the resources provided from each party, between the objectives pursued by the two partners, as well as between the resources gathered and the objectives set for the partnership.

No. 7: Prepare a launch and monitoring plan

The start is a delicate phase during which the partners go from theory to practice, from strategy on paper to strategy in reality.  As a result, this is a critical phase of the project, one that cannot be improvised. Moreover, if the initial input of the cooperation is clearly defined, and if the target is clear, the partners may check to make sure that it takes place as planned and may modify the situation if there is a problem.  Otherwise, without this plan, how can you know if the cooperation is not in line with the plan? It is therefore necessary to list the partners' contributions and actions based on a logical plan that will include:

  • the various measures to be taken;
  • the various managers;
  • the various milestones;
  • the results' evaluation dates;
  • the means to be used to resolve conflicts.

No. 8: Be wary of partial understandings

The decisive factor in the continuation of discussions is the mutual understanding between the senior managers and negotiators. Their personality may differ significantly, provided that they adapt to one another. Esteem, respect, listening and corporate culture are the terms that qualify affinities between senior managers. However, these must not be stronger than the interest of the partnership itself. The personal interests of the senior managers may differ significantly from the general interest of the company and may justify the introduction of cooperation that is primarily based on subjective complementarity.  Each of the partners must first share the strengths that will make the partnership strong and viable before entering into a cooperation based on weak points.

No. 9: Identify each party's precise role

During the negotiation period, each meeting must be focused on determining each party's role increasing precision (going from “what can we do together” to “how to do it”).  Similarly, the parties don’t have to forget to discuss on how decisions are taken.  Who will decide, and what will be each party's weight in these decisions?

No.10: Notify interim agreements in writing

In addition to the confidentiality commitment and the letter of intent, you would be wise to confirm each meeting's content with written minutes.Moreover, as soon as an agreement has been obtained, it must be formalised in a written document. For example, you will sign, especially when negotiations are long, documents such as “draft agreements”, “memoranda of understanding”, “agreements in principle”, “minutes”, etc. The way that you will use these documents is not without consequence. It demonstrates the existence of genuine autonomous contracts that will form the basis of the final contract or of subsequent contracts used to implement the base agreement (the framework agreement, draft agreement, etc.) and they will reveal the extent of your commitment to reaching a subsequent agreement (letters of intent, agreements in principle, etc.) or they will simply be mere phases in the discussion, in the sense that you have succeeded in identifying certain points on which you have reached an agreement, with the understanding that these points are conditional upon a final agreement and that everything may still be called into question.  Given the difficulty of determining the legal value of the terms used and the exact content of these various agreements, it is desirable for you to specify the consequences of any violation of the same:

  • by either clearly indicating that you do not want to legally bind yourself;
  • or by indicating that these preliminary agreements have legal value.

No.11: Do not terminate the process in an inappropriate manner

Although at this point you are probably not thinking about terminating the process, you (or your partner) might pay a price to do so. Are you free to break off negotiations? And can your partner, without warning, stop all negotiations and abandon the process? Although the law stipulates freedom of negotiation and the right to terminate, you may incur liability during negotiations.If the process is terminated, it must be terminated in appropriate conditions. Moreover, you must not terminate the process without valid reasons, or purely on a whim. In this case, the law stipulates that reparation will take the form of the payment of damages, the amount of which will depend on the damage associated with the fault committed.

Le Monde S.r.l. Unipersonale Via dell'Industria, 2F
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Tel. +39 049 9500850  -  PEC:
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