Our negotiation over the net working capital peg has become highly adversarial, with both sides hiding data and making defensive moves. How do we use the Trust Equation and the Trust Creation Process to reset this negotiation and finalize the deal terms?

Question

Tyler Smith · Accepted Answer

When a transaction turns adversarial, it is usually because both parties are operating from a place of self-absorption and fear. This defensiveness increases the perceived risk on both sides, which can quickly stall or destroy a deal. To break the deadlock, you must use the Trust Equation, which balances credibility, reliability, and intimacy against self-orientation.

First, lower your self-orientation by shifting your focus to the other party's underlying concerns. If the buyer is pushing for an inflated working capital peg, they are likely worried about cash drain immediately post-close. Acknowledge this concern directly.

Second, apply the Trust Creation Process. Engage the buyer in a direct discussion rather than passing redlines back and forth through lawyers. Listen to their financial assumptions without being defensive, and frame the problem as a shared challenge.

Third, provide total transparency. Open up your detailed inventory and accounts receivable ledger, and show the operational logic behind your numbers. When you share data openly, you build credibility and force the buyer to do the same.

Finally, propose a collaborative compromise, such as a rolling peg or a post-close adjustment mechanism with clear caps. By demonstrating reliability and a focus on a fair outcome, you build the trust needed to close the deal without leaving money on the table.