Deal Design: Strategies for Complex Dealmaking

Creative deal design can help you build a foundation of trust and cooperation—and avoid conflict and chaos—in negotiations involving multiple parties and contentious issues.

By — on / Dealmaking

complex dealmaking

As experienced negotiators well know, the more parties involved in a negotiation, the more difficult it often is to come to agreement, due in part to the logistical challenge of making sure each voice is heard. Yet multiparty negotiation offers considerable benefits. Most notably more opportunities for making tradeoffs and creating value in negotiation than are usually found in bilateral negotiations due to the greater number of issues people bring to the bargaining table.

When negotiators engage in thoughtful deal design, they position themselves to capitalize on the upsides of group negotiations and minimize the potential costs. The following three deal design choices, illustrated before and during the 2015 United Nations Climate Change Conference in Paris, can help get your next multiparty negotiation off to a strong start.

1. Lobby Key Players Upfront

In 2014, launching its preparations for the Paris talks, the French government appointed Laurence Tubiana, an Algerian-born political scientist who had worked at the World Bank, as its senior climate envoy and gave her virtual carte blanche to ensure a successful climate change conference.

In the 18 months leading up to the summit, Tubiana traveled the world, negotiating for behind-the-scenes support for the conference and its mission from diplomats, scientists, and others. She also instructed France’s elegant embassies to hold regular dinners and salons for key players on climate policy, including business leaders, lawmakers, and journalists. Her goal: to instill both urgency and optimism in the delegates of different nations so that they would arrive in Paris prepared and excited to negotiate a deal on climate change.

By lobbying for support from key constituents from the start, Tubiana built a groundswell of goodwill for the conference and its mission. Business negotiators would be wise to follow this deal design decision when preparing for multiparty dealmaking: Rather than just talking to the usual players, reach out to those whose support you will need before, during, and after your negotiation.

2. Choose Leaders Thoughtfully

The Paris conference’s cochairs, Daniel Reifsnyder, from the U.S. Department of State, and Ahmed Djoghlaf, an Algerian ambassador, were tasked with leading the delegates in Paris toward an agreement. Why two chairpeople? Disagreements between developing nations and developed nations on how to address climate change were so deep that a single leader from one faction inevitably would be distrusted by the other. Consequently, Reifsnyder was chosen to represent the developed world and Djoghlaf, the developing world.

Moreover, Reifsnyder and Djoghlaf shared an easy rapport honed over years of negotiating side by side at past international climate summits, Nell Greenfieldboyce reports for National Public Radio’s Morning Edition. They also had complementary strengths: Reifsnyder was known for his encyclopedic knowledge of the issues, while Djoghlaf was the “quintessential diplomat,” according to Reifsnyder, “extremely gifted and smooth with people.”

When facing complex, contentious negotiations, parties often assign their lawyers or a professional mediator to lead the process. Though these can be good options, the Paris talks suggest another interesting deal design choice: Have each side choose a representative with a proven track record for evenhandedness and collaboration, then have these representatives lead the negotiating process together. Ideally, they will model a cooperative spirit that rubs off on others at the table.

3. Consider a “Negotiating Text”

In February 2015, nearly a year before the start of the Paris conference, Reifsnyder and Djoghlaf convened climate-change delegates in Geneva, Switzerland, to create the first draft of a so-called negotiating text. In climate-change summits, the negotiating text is crafted by all participating nations before the talks begin.

Contributing to the negotiating text helps parties feel they are being heard and launches them on a journey toward a final draft. Negotiators debate critical language choices and work toward prioritizing key issues. “To build trust and goodwill,” according to Greenfieldboyce, delegates “could throw in any proposed text they wanted” in Geneva.

Draft agreements are common in deal design for high-stakes government and corporate negotiations, writes Tufts University professor Jeswald Salacuse in his book Negotiating Life: Secrets for Everyday Diplomacy and Deal Making (Palgrave Macmillan, 2013). Whether you prepare your own draft to present to a counterpart as a basis for negotiation or collaborate with a counterpart, the process can help you identify all the relevant issues as well as points of contention and agreement.

When negotiators work together on a draft agreement, they literally get on the same page from the start. This collaborative deal design choice can improve their odds of finding common ground and closing the deal as compared with simply exchanging a series of proposals.

What other deal design choices are you careful to consider before negotiating?

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