'Deal Doing' for Restructuring Professionals

Be Flexible

Generally, clearly stating goals and developing a bottom line not only enables parties to avoid negotiating blindly, but also improves outcomes. However, be willing to continually adjust that line up or down as facts emerge and new developments occur during the course of the negotiation. Articulating 'lines in the sand' should be truly principled ' absent that, credibility in line drawing is hard to establish.

Know the Players

It is essential to have an understanding of the key players in any negotiation. Recognizing who actually has de facto and de jure authority within an organization and who is most influential on these parties will help you make the right case to the right constituencies and get quick results. Recognize that titles and job descriptions are relevant but not dispositive of who the actual deal-makers on each side are. Understand the individual needs of negotiators vis-'-vis where they sit in their own organization.

Know the Business

A restructuring is just a process laid on top of whatever the real business and economic problems are. Con-sequently, understanding the business being restructured, its strengths and its weaknesses, will allow you to offer solutions that are both legally sound and pragmatic. Successful deal-makers realize that no matter how many restructurings they have been involved in, each industry and each business has its own unique set of restructuring challenges; no two businesses are identical. We like to say, 'Change the facts, we change the advice.'

Embrace The Chaos

Ambiguity and uncertainty are not bad words. Restructuring is the world of grays, not blacks and whites. A good negotiator is comfortable with the complexities and uncertainties inherent in the restructuring environment, where timing and balance are everything. The passage of time has a way of mitigating or minimizing seemingly intractable issues. A good negotiator is like a master of Judo, using other stakeholders' force to his or her advantage. Paying close attention to those moments when outside events change the restructuring dynamic allows successful deal-makers to recognize the right time to drive a deal to conclusion. Some deals can be done quickly, others need time to develop. Forcing a deal before its time or waiting too long to close, are both unfortunate impulses that should be resisted. By embracing the chaos and maintaining your balance, you can be in a position to execute your strategy at the right time and improve outcomes.

Don't Try to Win Every Point

Approaching a negotiation like a sporting event in which points are scored at your opponent's expense is a poor strategy that builds ill-will and bad faith at precisely the times that good listening and constructive solutions are called for to achieve a successful outcome. Effective deal-makers pick their battles and don't create issues over items that are insignificant to them, but which could matter a great deal to the other side. A negotiation is about give and take. If you want a winner takes all outcome, go to court. Remember to always leave the other side with some degree of dignity; it is valuable currency.

Vision, Strategy, Tactics, Flexibility

Establish each of these early ' don't confuse strategy for vision, or tactics for strategy ' otherwise, you will have created a recipe for not accomplishing your overall vision. Define success for yourself before you start negotiating. Be especially flexible on tactics, moderately flexible on strategy and inflexible on vision. Assume people act rationally. Putting yourself 'in their shoes' is a tool used by seasoned negotiators, that allows them to uncover others' needs and meet them.

'It's a Small World After All'

Don't try to make your fellow professionals look bad in front of their clients. It's not nice and it's not good business. Seasoned restructuring veterans know that what goes around comes around, sometimes it just takes a while. There is no such thing as a onetime interaction in a restructuring. Restructuring is a marathon, not a sprint. Even a single case may yield several critical negotiations, and gloating over the great deal you were able to extract in the opening months will be remembered by the parties on the other side and may come back to haunt you in the waning days of the case. Even more importantly, people remember in the next deal your behavior ' especially bad ' in the last deal, or even many deals ago. Credibility, integrity and honor are not just 'highfalutin” words, they have real meaning.

Listen

Listen and watch carefully. Good things come to those who wait. Being the most loquacious advisor in the room is not coterminous with success. Listen, actually listen, to what people say, and watch how they say it. Listen even more carefully to what's not being said ' it is often the most important; we call it the sound of the dog not barking.

Restructuring Is Frequently an 'Away' Game

Because negotiations are ultimately about making connections with people that have different goals and agendas than do you, the real meetings should be done in person whenever possible. Face-to-face meetings foster rapport and offer fewer openings for misunderstandings to develop. Despite their lower cost and perceived convenience, conference calls and e-mails are not conducive to active listening, and may create environments in which participants feel less inhibited about treating their adversaries with less than the appropriate amount of respect. If you want the deal not to get done, try to do it by e-mail. Getting a deal done is like moving the ball in a football game, it takes effort, discipline and a singular focus on the end zone. Recognize where you are on the field, and don't play between the 20s. Remember, the game is won or lost in the red zone.

Everyone Loves a Happy Ending

Regardless of where the negotiations begin, it is critically important to focus on the day after closing. An often overlooked aspect of a successful negotiation is that for the deal to get done, all parties need to be able to portray the results as a positive outcome. If one party is left without any dignity early on, the deal will never close. Respecting your adversaries and closing the gaps between your position and theirs is the right way to go. Excessive posturing, threats and dishonesty should be avoided at all costs ' you can only sell your integrity once and when it is gone, all the hard work that you have done professionally and in the negotiation will have been for naught. If you treat everyone on the deal as your next potential client, you will perform well for your current client and gain respect that will help you to be more successful when it is time to cut the next deal.

Speak Softly and Carry a Big Stick

Litigation (or at least the credible ability to engage in it) should be thought of as a part of the overall tapestry that is a restructuring. Some-times litigation is unavoidable. Thus, restructuring professionals need to be comfortable with litigation and understand its consequences. However, being comfortable with conflict is a far cry from looking for a fight. It is best to avoid conflict whenever possible. Paradoxically, the best way to avoid serious conflicts in a particular negotiation or restructuring is to be prepared to fight for your position. If people believe that you are willing, really willing, from a legal, business and psychological perspective to stick to your guns and fight on a particular issue, they will be less likely to pick the fight in the first place and will be more likely to work with you to achieve a consensual solution.

Have a Good Time

Last but not least, if you're going to work exceedingly hard, you should at least have a good time. Be curious, get to know the people on the deal. If you're having fun, you will be more relaxed, creative and effective. If you act on the points above, you will be comfortable, you will be more effective, and you won't send a signal to the other side that they have bested you on any particular issue. Don't imitate other peoples' styles; everyone needs his or her own. But watch the more seasoned folks in a deal and how they work. Pick up nuggets from other peoples' styles that you think work for you. In our industry, it is certainly true that you're only as good as your last restructuring ' fees and future deals are the byproduct of successful results, not a reward for failing to make a deal work. Moreover, if you are interested in the people with whom you are dealing -' whichever side they're on ' you'll make some lifelong friends, especially after having been deep in the trenches in a tough negotiation.

Author's Note: Rather than focusing on a particular legal issue or case, this month I asked a few friends to share some of their thoughts on effective deal making. Whether you're an old pro in the restructuring arena or an apprentice, a mastery of the following principles is essential if your goal is to help bring stakeholders together and make deals happen.

Be Prepared

Your Scout manual was right ' you should always be prepared. And for lawyers, clients and other advisers alike, there is no substitute for doing homework. You can't control whether you're the smartest person in the room, or whether your client has the most leverage, but you are completely in control of who will be the most prepared person in the room. An important part of preparation is knowing all of the strengths and weaknesses of your position, as well as the positions of the other stakeholders. Pre-negotiation pre-paration gives everyone a sense of their goals for the negotiation, and the point beyond which it no longer makes sense to continue negotiating.

Be Flexible

Generally, clearly stating goals and developing a bottom line not only enables parties to avoid negotiating blindly, but also improves outcomes. However, be willing to continually adjust that line up or down as facts emerge and new developments occur during the course of the negotiation. Articulating 'lines in the sand' should be truly principled ' absent that, credibility in line drawing is hard to establish.

Know the Players

It is essential to have an understanding of the key players in any negotiation. Recognizing who actually has de facto and de jure authority within an organization and who is most influential on these parties will help you make the right case to the right constituencies and get quick results. Recognize that titles and job descriptions are relevant but not dispositive of who the actual deal-makers on each side are. Understand the individual needs of negotiators vis-'-vis where they sit in their own organization.

Know the Business

A restructuring is just a process laid on top of whatever the real business and economic problems are. Con-sequently, understanding the business being restructured, its strengths and its weaknesses, will allow you to offer solutions that are both legally sound and pragmatic. Successful deal-makers realize that no matter how many restructurings they have been involved in, each industry and each business has its own unique set of restructuring challenges; no two businesses are identical. We like to say, 'Change the facts, we change the advice.'

Embrace The Chaos

Ambiguity and uncertainty are not bad words. Restructuring is the world of grays, not blacks and whites. A good negotiator is comfortable with the complexities and uncertainties inherent in the restructuring environment, where timing and balance are everything. The passage of time has a way of mitigating or minimizing seemingly intractable issues. A good negotiator is like a master of Judo, using other stakeholders' force to his or her advantage. Paying close attention to those moments when outside events change the restructuring dynamic allows successful deal-makers to recognize the right time to drive a deal to conclusion. Some deals can be done quickly, others need time to develop. Forcing a deal before its time or waiting too long to close, are both unfortunate impulses that should be resisted. By embracing the chaos and maintaining your balance, you can be in a position to execute your strategy at the right time and improve outcomes.

Don't Try to Win Every Point

Approaching a negotiation like a sporting event in which points are scored at your opponent's expense is a poor strategy that builds ill-will and bad faith at precisely the times that good listening and constructive solutions are called for to achieve a successful outcome. Effective deal-makers pick their battles and don't create issues over items that are insignificant to them, but which could matter a great deal to the other side. A negotiation is about give and take. If you want a winner takes all outcome, go to court. Remember to always leave the other side with some degree of dignity; it is valuable currency.

Vision, Strategy, Tactics, Flexibility

Establish each of these early ' don't confuse strategy for vision, or tactics for strategy ' otherwise, you will have created a recipe for not accomplishing your overall vision. Define success for yourself before you start negotiating. Be especially flexible on tactics, moderately flexible on strategy and inflexible on vision. Assume people act rationally. Putting yourself 'in their shoes' is a tool used by seasoned negotiators, that allows them to uncover others' needs and meet them.

'It's a Small World After All'

Don't try to make your fellow professionals look bad in front of their clients. It's not nice and it's not good business. Seasoned restructuring veterans know that what goes around comes around, sometimes it just takes a while. There is no such thing as a onetime interaction in a restructuring. Restructuring is a marathon, not a sprint. Even a single case may yield several critical negotiations, and gloating over the great deal you were able to extract in the opening months will be remembered by the parties on the other side and may come back to haunt you in the waning days of the case. Even more importantly, people remember in the next deal your behavior ' especially bad ' in the last deal, or even many deals ago. Credibility, integrity and honor are not just 'highfalutin” words, they have real meaning.

Listen

Listen and watch carefully. Good things come to those who wait. Being the most loquacious advisor in the room is not coterminous with success. Listen, actually listen, to what people say, and watch how they say it. Listen even more carefully to what's not being said ' it is often the most important; we call it the sound of the dog not barking.

Restructuring Is Frequently an 'Away' Game

Because negotiations are ultimately about making connections with people that have different goals and agendas than do you, the real meetings should be done in person whenever possible. Face-to-face meetings foster rapport and offer fewer openings for misunderstandings to develop. Despite their lower cost and perceived convenience, conference calls and e-mails are not conducive to active listening, and may create environments in which participants feel less inhibited about treating their adversaries with less than the appropriate amount of respect. If you want the deal not to get done, try to do it by e-mail. Getting a deal done is like moving the ball in a football game, it takes effort, discipline and a singular focus on the end zone. Recognize where you are on the field, and don't play between the 20s. Remember, the game is won or lost in the red zone.

Everyone Loves a Happy Ending

Regardless of where the negotiations begin, it is critically important to focus on the day after closing. An often overlooked aspect of a successful negotiation is that for the deal to get done, all parties need to be able to portray the results as a positive outcome. If one party is left without any dignity early on, the deal will never close. Respecting your adversaries and closing the gaps between your position and theirs is the right way to go. Excessive posturing, threats and dishonesty should be avoided at all costs ' you can only sell your integrity once and when it is gone, all the hard work that you have done professionally and in the negotiation will have been for naught. If you treat everyone on the deal as your next potential client, you will perform well for your current client and gain respect that will help you to be more successful when it is time to cut the next deal.

Speak Softly and Carry a Big Stick

Litigation (or at least the credible ability to engage in it) should be thought of as a part of the overall tapestry that is a restructuring. Some-times litigation is unavoidable. Thus, restructuring professionals need to be comfortable with litigation and understand its consequences. However, being comfortable with conflict is a far cry from looking for a fight. It is best to avoid conflict whenever possible. Paradoxically, the best way to avoid serious conflicts in a particular negotiation or restructuring is to be prepared to fight for your position. If people believe that you are willing, really willing, from a legal, business and psychological perspective to stick to your guns and fight on a particular issue, they will be less likely to pick the fight in the first place and will be more likely to work with you to achieve a consensual solution.

Have a Good Time

Last but not least, if you're going to work exceedingly hard, you should at least have a good time. Be curious, get to know the people on the deal. If you're having fun, you will be more relaxed, creative and effective. If you act on the points above, you will be comfortable, you will be more effective, and you won't send a signal to the other side that they have bested you on any particular issue. Don't imitate other peoples' styles; everyone needs his or her own. But watch the more seasoned folks in a deal and how they work. Pick up nuggets from other peoples' styles that you think work for you. In our industry, it is certainly true that you're only as good as your last restructuring ' fees and future deals are the byproduct of successful results, not a reward for failing to make a deal work. Moreover, if you are interested in the people with whom you are dealing -' whichever side they're on ' you'll make some lifelong friends, especially after having been deep in the trenches in a tough negotiation.