Mastering Negotiations: Tactics for Lawyers in M&A

The coffee cups have gone cold, the conference room is filled with documents, laptops, and phones vibrating non-stop. Seated at the table are lawyers, startup founders, and investors, each with their own agenda. The atmosphere? Tense but controlled. Deals aren’t just closed here, companies are shaped, or sometimes, they fall apart.

"Negotiating in M&A is a game of strategy and psychology," says Junes El-Sayyid, Startup & Legal Advisor at JES Ventures. "It’s not about who shouts the loudest, but about who reads the room best."

Strategies and Tactics

M&A negotiations are far more than your typical legal case. "Many entrepreneurs think negotiating is only about legal clauses and financial margins. But in reality, it’s much more subtle. It’s mostly about managing expectations and choosing the right moments to apply pressure."

According to Junes, everything starts with preparation. "You have to look beyond the legal framework and surround yourself with a strong team of experts. The commercial aspect, the market, investor dynamics, and the target’s growth trajectory, all of these factors determine how flexible you can be in a deal."

A strong negotiator? “Someone who understands not only the legal pitfalls but also the business and investor mindset”.

Tactics That Work in M&A Negotiations

Salami Technique: Breaking Big Issues Into Smaller Wins

M&A negotiations can feel overwhelming, with multiple complex issues in play at once. The salami technique helps manage this complexity by breaking down large topics into smaller, more digestible pieces.

For example, instead of outright rejecting a strong indemnity package for the seller, a buyer might negotiate gradual reductions. First, they suggest capping liabilities for certain risks. Later, they propose shortening survival periods for warranties. Finally, they introduce deductibles and thresholds that further reduce the seller’s protection. Each step seems minor, but together, they shift significant risk onto the seller. By fragmenting the negotiation, each step can be addressed individually, making concessions feel smaller and more manageable.

"Each small agreement builds momentum. And before you know it, the entire salami has been sliced, and the deal is done."

Good Cop/Bad Cop: The Psychology of Contrast

This classic negotiation tactic is highly effective in M&A settings. One negotiator plays the bad cop, taking a firm, uncompromising stance, while another plays the good cop, appearing more cooperative and flexible.

This contrast can push the other party toward a compromise, as they perceive the good cop as the reasonable one and feel inclined to negotiate with them.

"Sometimes, you take a hard line so that your client appears as the reasonable party. This can create goodwill and ultimately help secure better terms."

The risk? If this tactic is too obvious, it can backfire and erode trust. It works best when there is a natural division of roles within the negotiation team.

Bracketing: Controlling the Negotiation Range

Bracketing is about setting the right negotiation framework. Do you start with a reasonable proposal, or do you push the boundaries with an extreme offer to leave room for concessions?

A common strategy is to start with a number slightly outside the desired outcome. For example, if a startup wants to achieve a €50 million valuation, they might open negotiations at €60 million, so the final deal lands closer to their target.

"How aggressive you play depends on who’s sitting across the table," says Junes. "With experienced negotiators, an extreme position can backfire. But with less experienced counterparts, it can shift outcomes in your favor."

The key is to push just far enough to create leverage without making the other side walk away.

Strategic Silence: The Power of Saying Nothing

People naturally feel uncomfortable with silence, especially in high-stakes negotiations. This is why strategic silence can be such a powerful tool.

When a negotiator makes an offer and then stays silent, the other party often feels compelled to respond, sometimes revealing more information than intended or making unnecessary concessions.

"Silence forces the other side to speak. And more often than not, they fill that space with arguments you can use to your advantage."

Beyond extracting information, silence also projects patience and control, both critical in negotiations where time pressure plays a role.

The Impact of M&A Negotiations

Why is negotiation so crucial in M&A? According to Junes, it often comes down to an information gap. "A seller knows their company inside out, while a buyer relies on due diligence and disclosed data. That imbalance creates uncertainty and sometimes distrust."

This is even more pronounced in the startup and venture capital world. "Startups are often sold based on future potential. The negotiation isn’t just about what the company is worth today, but also how that potential is shared between the buyer and seller."

A well-structured negotiation process helps bridge that gap. "It ensures that the buyer gains confidence in the deal, while the seller can sleep soundly, knowing they are protected from unexpected claims and haven’t conceded more than necessary."

The Human Factor in Negotiations

M&A negotiations aren’t just about numbers and contracts. Emotions play a big role, especially for founders selling their company.

"Founders have often spent years building their company, and now they have to let go. That’s emotional, whether they admit it or not." But according to Junes, the emotional factor is sometimes overestimated. "In the end, they are compensated and often stay involved for a while through an earn-out. They’re no longer in the driver’s seat, but they remain engaged."

However, emotions can be a strategic advantage. "Sometimes, negotiations are won with arguments based purely on feelings. The seller’s reluctance to give up control and doubts about the buyer’s ability to run the business can create resistance to an earn-out. This in turn will often lead to a push for a higher upfront payment."

The Psychology of Negotiation

M&A negotiations aren’t just about numbers and contract terms, they are deeply psychological. Deals are often won or lost based on how negotiators manage perception, pressure, and persuasion. Understanding human behavior, cognitive biases, and emotional triggers can be just as important as having a solid legal or financial strategy.

"The best negotiators don’t just argue the facts; they shape the way the other party perceives the deal," says Junes El-Sayyid. "They control the pace, the tone, and the expectations, making the other side feel like they are making a good deal, even when they are conceding more than they planned."

Here are four psychological tactics that can give negotiators a crucial edge.

Anchoring: Setting the Reference Point

People tend to rely on the first piece of information they receive in a negotiation, a cognitive bias known as anchoring. By starting with an extreme initial proposal, a negotiator can set the reference point for discussions, making later compromises seem more reasonable.

"The first number thrown into a negotiation often shapes the entire conversation. Set your anchor strategically, and you control the playing field."

The key is to anchor aggressively but credibly, if your opening demand is too extreme, the other side may walk away before negotiations even begin.

Projecting Calmness and Authority

A second key element is that confidence is contagious in negotiations. The way you present yourself, your tone, body language, and the pace of your responses directly influences how the other party perceives your strength and leverage.

Negotiators who stay calm and composed, even under pressure, appear more in control and create doubt in the minds of their counterparts. Nervous energy, rushed decisions, or visible frustration, on the other hand, can weaken a negotiator’s position.

"The calmer you remain, the stronger your position. If you don’t look pressured, the other side will assume you have options."

This psychological edge is particularly useful in high-stakes M&A deals, where emotions can run high and power dynamics shift rapidly.

Communicating Win-Win Solutions

A third aspect that will shape the negotiation process is the ability to communicate win-win solutions. M&A deals often involve zero-sum aspects, where one party’s gain comes at the other’s expense. However, skilled negotiators know that how a proposal is framed can influence its acceptance. Instead of presenting a demand as something the other party must accept, it can be positioned as a logical, even beneficial, choice.

For example, if a buyer seeks stricter earn-out conditions, they can argue that it helps the seller showcase the company’s long-term potential, increasing the likelihood of achieving a higher total payout.

"Reframing a demand to highlight its rationale or potential upside makes it much harder for the other side to reject."

While not every aspect of a deal is a win-win, reducing perceived losses and aligning incentives can lead to a smoother negotiation process and increase the chances of a successful deal.

Choosing Pressure Points Wisely

The final psychological strategy to keep in mind is that timing is everything in negotiations. Knowing when and where to apply pressure can make the difference between securing a favorable deal and pushing too hard, causing the other side to walk away.

For instance, if a startup has limited runway before it runs out of cash, a buyer has a natural advantage, they can wait and push for better terms. However, overplaying this leverage can backfire. If the startup is forced into overly aggressive terms, the founders may lose motivation post-deal, affecting performance and ultimately diminishing the investor’s returns.

But the reverse is also true: if a buyer is highly interested in a company and faces competition, the seller can slow down the process to increase their leverage.

"Every deal has leverage points. The trick is identifying them early and using them at the right moment."

Great negotiators don’t just capitalize on their own strengths; they leverage the other party’s weaknesses and constraints to maximize their advantage - while also knowing when pressing too hard could weaken the very asset they’re investing in.

The Takeaway

M&A isn’t a theoretical exercise. It’s a game of strategy, psychology, and timing. "You can be the best lawyer in the world, but if you don’t understand negotiation dynamics, you’ll never close the best deals."

"And perhaps most importantly? Know when to push, when to concede, and when to stay silent."