This past fall, three grown children set about helping their mother, Mina, find a memory care facility for John, their 85-year-old father. John’s previously mild dementia had progressed rapidly during the Covid-19 pandemic, to the point that he could no longer live safely at home.
John’s children gathered a short list of affordable long-term care facilities in their area from a free online service. With facilities in their state on lockdown to protect residents from the coronavirus, the family was unable to go on tours to get a sense of the environment and the care John would receive. However, the sales representatives they met with—either outside facilities or online—all walked them through their memory-care wings on video calls.
The virtual tours weren’t quite the same as being there, but they helped the family narrow their choices: They eliminated one facility that seemed small and focused on two that looked cheerful and well staffed. They also spoke to residents’ family members, consulted online reviews, and researched Covid cases and protocols.
When it came time to choose, the children decided to try to negotiate the monthly rate quoted by the facility Mina liked best. They knew the business was eager to fill rooms after being closed to new residents for several months; an up-front “buy-in fee” had already been waived. After the family cited a competitor’s significantly lower rates, the facility offered a lower monthly rate and supplemental nursing care locked in at the lowest rate for life.
John’s move was tumultuous and difficult for him and Mina. But after several months, he has settled into his new home with the help of supportive staff, and she feels confident that she made the best choice possible for him.
Nearly everything about negotiating is different during a global pandemic—but we’re managing to adjust, as John’s family did. Confronted with lockdowns, social distancing, an economic downturn, and personal struggles, we’re nonetheless discovering new ways to build trust, manage uncertainty and risk, and create value.
In fact, in the realm of business negotiations, many industries are now matching or even exceeding their pre- pandemic rate of dealmaking. After an initial slowdown, global companies struck deals worth more than $1 trillion in the third quarter of 2020, as compared to $762.7 billion during the third quarter of 2019, according to Dealogic Ltd. Ever adaptable, we humans are inventing work- arounds and even, as we’ll see, finding some upsides to negotiating at a distance.
Zooming full speed ahead
Mergers and acquisitions (M&As) slowed to a crawl this past spring in part because dealmakers weren’t sure how they could build the rapport and trust needed to negotiate high-risk deals at a distance. Without being able to travel to get to know new partners, tour their offices and manufacturing plants, and schmooze over dinner, how could negotiators ensure that unfamiliar counterparts would live up to expectations?
Videoconferences may lack the warmth and socialization opportunities of in-person negotiations, but many negotiators have found they are able to get to know counterparts virtually and negotiate efficiently online. The 2020 edition of the normally glitzy Cannes Film Festival, held in May, showed that people in the film business “can still sell and pitch 12 hours a day,” Independent Film & Television Alliance president and CEO Jean Prewitt told Variety. Highland Film Group cofounder Delphine Perrier told Variety that she did business effectively at the online Cannes, though she added, “I miss the glamour.”
Others are finding that meeting via video can bring unexpected benefits. When as many people can join a video call as needed, rather than just the skeleton crew that a company can afford to send to a distant locale, more voices can be heard. Negotiations also have tended to move faster during the pandemic, given that “everybody is at home and . . . accessible via Zoom,” Zuora CEO Tien Tzuo told the Wall Street Journal. Executive searches that used to take several months or more are now often wrapped up in weeks, several recruiters told the Journal.
Trust, but verify even more
What about trust? To some degree, negotiators are compensating for the awkwardness and difficulties of virtual rapport building by relying on other means of establishing trust. M&A deals picked up steam when buyers found out they could still engage in thorough due diligence, albeit creatively. In our June 2020 issue, for instance, we described how buyers started using drones to get a close look at sellers’ facilities and plants.
“To move [negotiations] forward, you’ve got to provide more information than you usually do,” UAS Laboratories president and CEO Kevin Mehring told the Journal after his firm was the target in an acquisition. “You’ve got to build the trust virtually.”
To examine the cell-engineering facilities of a U.K. business it was considering buying this fall, Massachusetts-based diagnostics company PerkinElmer relied on virtual tours. “We were able to pause, rewind, and zoom into certain areas,” company CFO James Mock told the Journal. And as noted in our opening story, assisted-living facilities are leading families on virtual tours, just as realtors are doing for homebuyers.
Similarly, because it’s often harder to assess job candidates on a video chat than in person, recruiters and employers are giving references and background checks greater weight, writes Nina Trentmann in the Journal. Of course, that’s something they should have been doing all along. If negotiators are, indeed, recognizing the shortcomings of their intuition and paying more attention to hard data, that would be one silver lining of this difficult time.
To fly or not to fly?
The recent practice of employees and entrepreneurs negotiating deals large and small from their dining tables and guest bedrooms has shown many organizations how much can be accomplished at a distance—and how much money they can save on business travel.
Brian O’Shea, CEO of film sales and financing company The Exchange, told Variety that it’s more challenging for sellers to create awareness of their films in online festivals but that “you save a lot of money by not having to rent space at the Loews [for screenings] and not take people to dinner.”
Eyeing their bottom lines, many organizations are in no rush to return to the days of frequent-flier miles and per diems. But some argue that Zoom fatigue is real and that negotiators should begin hopping on planes as soon as it’s safe to do so. “I would never buy a company based just on a virtual relationship,” Teleperformance chairman and CEO Daniel Julien told the Journal.
For now, a hybrid online/in-person negotiation may be advisable if it can be done safely. When it was in talks to acquire U.S.-based UAS Laboratories, Denmark-based global ingredient manufacturer Chr. Hansen Holding A/S mostly relied on video presentations for due diligence. But before closing the deal, Chr. Hansen sent two people “to confirm that there is a plant at this address,” Mehring of UAS Laboratories told the Journal.
When former Tribune Company CFO Chandler Bigelow began interviewing for a new job in the spring of 2020, meetings were conducted online and on the phone. His talks with Nielsen Global Connect (now NielsenIQ ) got serious. But, Nielsen CEO David Rawlinson told the Journal, “In the end, it felt a bit odd to hire a CFO who I had never met.” So, before making an offer, Rawlinson invited Bigelow to his backyard for a brief, socially distanced talk with masks. Bigelow joined the company on June 1.
Others say that when business travel becomes safe, they’ll do whatever their biggest customers prefer: “If they want to have a face-to-face meeting, will you go? Of course you’ll go,” DigiTravel managing partner Susan Lichtenstein told the BBC.
When online shopping gets complicated
When executives at Swedish medical business Sandvik Materials Technology decided in mid-2020 to open a new location in the United States, they knew they would have to forgo their usual site visits, which typically involved exploring a city, meeting with local officials, and taking hard-hat tours, writes Sandvik medical- business chief Gary Davies in Fast Company.
Moving their search process fully online, Davies and his colleagues used a web- based tool to locate available building space. They narrowed down their options to three U.S. states and, with the help of commercial real-estate agents in each one, toured sites via video. Local economic development groups provided valuable information about logistics, available talent, and the cost of doing business.
Ultimately, the company felt confident choosing Tucson, Ariz., for its new location without even visiting the area. The process took 50 virtual meeting hours, but Davies said Sandvik invested far less time and money in the selection process than it had in the past. “We’re thinking this will be the de facto way we make our expansion decisions moving forward,” he writes.