Does Win/Win Really Exist?
Over the course of your career, you have likely heard someone talk about the concept of a “Win/Win deal,” which for clarification purposes, is a transaction or situation that is advantageous to all parties involved. In all likelihood, you have probably also wondered if a Win/Win deal is a deal that isn’t really good enough for at least one of the parties. This is a common query, and a great question to answer to help you really understand the true value of a Win/Win transaction.
Most people have a sense that if a deal works for everyone, then it must be because someone has been short changed somewhere. “Isn’t it true, certainly in business, that we really only have winners and losers (only occasionally do we have a tie)? If we just have winners, then surely someone wasn’t as much of a winner as they could possibly have been!” This is a feeling we encounter all of the time. Sometimes we find this attitude in the dentists we deal with. Often, we find this attitude in accountants and lawyers who seem to feel the need to justify their fees, or need the confrontation to support their self-esteem. Regardless of where this attitude is coming from, it is not constructive and does not serve either party well.
A great number of practices that are sold today are sold on the understanding that the original owner is going to stay on for some period of time as an associate. The lack of a Win/Win transaction in these situations will usually always lead to an unhappy conclusion. If you were the buyer and came to believe that either the price or the terms of the agreement were not fair, how are you going to feel about your associate? If you were the seller and came to believe that either the price or the terms of the contract were not fair, how are you going to feel about working for the owner that you believe got the better of you? The answer to both of these questions is RESENTFUL. In turn, the resulting resentment will sour the relationship and lead to an ultimate outcome that neither of the parties was looking for – Lose/Lose.
So how do we get to a Win/Win situation? It is actually pretty easy and starts with accepting the concept that a deal can be good for both parties. I once had a perspective buyer suggest that I structure a deal that neither he nor the seller would like. This is an interesting concept, but it is rooted in the belief that in order for the deal to be acceptable, it would need to be less than ideal for both parties. Would it be that difficult to structure a deal that would be ideal for both parties? Not really! It just takes the ability to creatively think outside of the box – this is where Brokers can be very helpful.
Everyone wants to feel like they achieved a winning deal whether that relates to buying or selling a house, a car or a dental practice. Each party will have their own unique set of criteria as to what constitutes a winning deal for them. It is really easy to craft a Win/Win deal when there is no conflict over each parties’ criteria – if what is important to one is not important to the other. When both parties share criteria or points of interest, and the outcomes for those points of interest are different, then things start to get complicated. Money is typically the most commonly shared point of interest; The seller wants a get as much as possible, and the buyer want to spend as little as possible. If both parties are pretty firm on the importance they attach to the monetary part of the equation, how can you come to a Win/Win conclusion?
Fortunately, in every deal there are points of interest that are not shared by both parties, and most of these points can be “monetized”. For example, a vendor wants to sell his practice for 100% of appraised value and will stay on as an associate for 3 years. The buyer only wants to pay 90% of the appraised value and wants the vendor to stay on for 5 years. The ultimate solution was that the buyer agreed to pay 100% of the appraised value and the vendor agreed to stay on as an associate for 5 years. For the vendor, getting 100% of the appraised price for his practice was more important than working two extra years. For the purchaser, getting an extra two-year commitment from the vendor was more important than the upfront money. It was a Win/Win.
The preceding resolution was an easy one; but what if they both put an equal importance on the money and were not prepared to be flexible in any way? If that were the case, they would need to be prepared to accept a “no deal” outcome. If either one of them was not prepared to accept a no deal consequence, then they would need to find something to bargain with, even if that was the money. If a no deal outcome was a stronger point of interest than the money, then clearly money becomes the bargaining chip.
In summary, to get to a Win/Win outcome, parties need to be willing to bargain with their points of interest or they need to be prepared to walk away from the deal. If one of the parties accepts a Win/Lose deal with them being the loser, the “winner” needs to accept the very real possibility the their “win” will ultimately become a “lose.”