What is emotional intelligence (EI)? It’s most commonly understood as the ability to understand, use, and manage our emotions, as well as how we handle the emotions of people around us. It involves being aware of our emotional states and reactions, as well as recognizing and empathizing with the emotions of those around us. It also includes self-regulation—the ability to regulate our own emotions in order to achieve positive outcomes and be able to effectively solve problems. EI can help people relate better with others, stay calm under pressure, make more productive decisions, and act more ethically in stressful situations.
This concept is vital in commercial due diligence negotiations, impacting communication, collaboration, and decision-making. Technical expertise alone is insufficient for successful negotiations. Embracing emotional understanding and management fosters trust, mutual goals, and conflict resolution.
How to build rapport and trust
People buy from people, not from companies. Building rapport and trust is essential in successful negotiations, especially in commercial due diligence. To gather the necessary information, it is crucial to establish a strong relationship with your counterpart. Active listening, thoughtful questioning, and understanding their objectives are key. This approach helps them feel valued, heard, and respected, fostering a collaborative partnership rather than an adversarial one.
Smarter decision-making
How to be smart about decision-making? Effective decision-making is crucial in commercial due diligence. While legal requirements must be followed, it’s equally vital to make sound choices for your company, free from emotional influences. Emotional intelligence enhances logical decision-making by enabling a better understanding of people’s emotions, motivations, actions, and reactions. This, in turn, enhances decision-making during negotiations with potential partners in commercial due diligence.
Dealing with conflict and emotion
In business acquisitions, conflicts often arise between the management teams of the involved companies due to differences in styles, goals, or personalities. These conflicts can lead to heightened emotions during negotiations, making it challenging to focus on due diligence and crucial tasks like valuation, asset assessment, and negotiation. Emotional intelligence (EI) allows for proactive conflict management, identifying and addressing conflicts before they become problematic.
How to handle difficult conversations
Difficult conversations can happen at every meeting without even having the slightest idea beforehand. During commercial due diligence, emotional intelligence can be applied to manage challenging conversations that arise in negotiations. Topics like finance, layoffs, or management changes often come up, but EI helps navigate these situations for positive outcomes. Taking an empathetic approach ensures stakeholders are treated well, leading to smoother discussions and negotiations. This can be part of the deal room too and you should prepare for it, even if you originally thought that it would be smooth sailing.
Relationship building after the deal is done
Negotiating commercial due diligence is a process that aims to reach an agreement that satisfies both parties and ensures the success of the business relationship. However, in some cases, negotiations may go wrong and lead to bad blood between parties, harming future collaborations. To prevent this from happening, Emotional Intelligence plays an important role in negotiating commercial due diligence. It enables negotiators to understand their own emotions and those of others. This helps them preserve positive relationships following negotiations, potentially leading to future collaborations.
What remains?
Even though this concept might not be aware to everybody, the practice is important and should be trained and kept in mind. It is important to remember that emotional intelligence is not a magic bullet. It’s not a panacea. It’s your potential to solve problems. It is just one tool among many that can be used to maximize your efficacy as a negotiator. Moreover, EI is an incredibly useful tool when you balance it with objective, data-driven analyses. It allows you to make more accurate assessments of potential acquisitions and strengthens relationships with stakeholders, resulting in overall better deals.
Photo credit: The feature image is symbolic and has been done by Christopher Isak with Midjourney for TechAcute.
This guest article has been submitted by Staccy Minnityy. While we appreciate guest contributions, it's important to note that the views expressed by the author are not necessarily reflective of those held by TechAcute.
