Intercultural negotiation skills in German-Italian transactions
The “how” of initiating the talks between the parties is very important, as this is often where the course of mutual interaction is set during the negotiations. At this stage, the flexibility of the respective interlocutors and their negotiating power are tested in particular, which have a direct impact on the terms of the share purchase to be negotiated. Without mutual understanding and respect for the respective other culture and the different approaches to solving conflicts, a failure of the negotiations is quickly pre-programmed.
TIP‑1: First tune into each other with superficial topics to get to know each other and get a feel for the other person’s personality. In Italy, this is also part of good manners and a sign of respect.
TIP‑2: Establish eye level on content and a structured plan when entering negotiations. The important thing here is to have clear goals and a strict timeline, and to pursue them in a well-structured and objective manner.
TIP‑3: When conflict arises, de-escalation is the top priority. Building up further pressure and playing for power, as is still common in traditional M&A consulting, quickly has the opposite effect on Italians. Under no circumstances should the interlocutor be “talked down to” In order to assert one’s own position in a respectful manner, a profound knowledge of both cultures and the necessary tact are required.
The continued brisk cross-border business despite political changes and the Covid-19 pandemic, as well as ever-improving English language skills, belies the sometimes very different formal and legal requirements. Here, it is important to consciously take advantage of differences within the framework of contractual design in order to strengthen one’s own position.
For example, in Italy, shares in a limited liability company can be effectively sold without notarization in the internal relationship between the parties. This leads, among other things, to different requirements for the structure of the share purchase agreement, the investments and the timing for signing and closing. The legal structure of managing director employment contracts, especially in the context of increasingly popular earn-out clauses in share purchase agreements, also functions quite differently in the two countries. The same applies in the context of the requirements for the burden of proof in the case of claims for damages and non-competition clauses.
Knowing the weaknesses and strengths in the respective legal systems and explaining them to my clients so that they can then consciously use them when drafting contracts is an essential part of my substantive work.
The same applies to the cultural and linguistic components of my work. This goes far beyond mere translation or understanding. For this, one must be aware that there is a big difference in the way of communication in both countries. The Germans’ very direct manner is perceived as positive by them, since it is straightforward, efficient and open, and is thus often used quite consciously. Italians, on the other hand, communicate completely differently, on two different levels. What is said and what is actually meant by this can vary greatly. This quickly leads to misunderstandings. Also, too direct communication often comes across as rude, arrogant and clumsy to Italians. This can quickly change power structures.
In addition to providing highly specialized and legally sound advice, I sensitize my clients to become aware of the different effects of their communication in order to then use them in a very targeted manner in contract negotiations to strengthen their own position. Ultimately, conflict situations are about consciously dealing with legal and cultural differences as well as different interests. The best way to deal with difference is through mutual respect and a culture of conversation that embraces this.
About Sandra Bendler-Pepy
She joined SLB LAW in 2018 after working for 10 years in renowned international commercial law firms in Milan and Munich and a stint as a partner in a Munich-based transactional law firm. She became the firm’s youngest partner in July 2019 and joined the executive team in June 2022. In addition to general legal advice and contract drafting, she continues to focus on M&A. She advises on national and international transactions and also heads the firm’s steadily growing Italian Desk.