Negotiating with Strength
As a business lawyer, negotiation is a part of my daily activities. But for many people, negotiation can be foreign and uncomfortable. Learning a few important factors can reduce your stress and result in better negotiation outcomes.
For example, a client and I were negotiating a business purchase. Everyone sat at a large conference table for many hours discussing terms and contracts.
At one point the seller got mad. He wanted my client to accept his contract provisions as is and close the deal. When we refused the take-it-or-leave-it offer, he threw his chair back and stormed out of the room.
My client was confused and worried. Had he lost the business? Should he capitulate?
I suggested that we get up and leave immediately. My client couldn’t lose unless he stayed. Either the seller would come get us and we’d have more leverage, or the deal was over. But, no more harm would be done by leaving.
Just as we left the office, the seller’s attorney said she’d “calmed her client.” We went back to the table, only with more leverage. The seller’s outburst backfired because it was a ploy and he wasn’t willing to let the deal go.
This shows how a simple mistake can harm your negotiating strength.
Negotiating from a position of strength requires that you focus on a few key factors.
First, remember that both parties must take something from the deal.
One sided deals rarely stick. The “losing” party finds a way to undo the deal or doesn’t follow through. When that happens, the “winning” party loses too.
This means you must consider the goals and objectives of the other side and how you (yes you) can achieve them.
Inexperienced negotiators usually think of a one variable zero sum arrangement – I only win if you lose. They focus only on price or money.
But, there are many other variables to a negotiation. Some are of great importance to one side and of no importance to the other. So dig below the surface to see various options.
Second: take time to consider the range of acceptable alternatives BEFORE you get to the table.
Doing this at the negotiating table is a sure ticket to a bad deal.
Break your requirements into best case and minimum acceptable deals. The minimum acceptable deal is the point below which you will not go, no matter what.
Make a pact with yourself that you won’t do a deal below the minimum acceptable level today. We humans are great at rationalizing. And, the light of day can reveal the harsh reality of an ill conceived arrangement.
To know where that is, consider your alternatives to a negotiated arrangement. Is there another business or home you could purchase? What costs, losses and benefits are there if you don’t do a deal?
By the way, you might be wrong. In fact, your could be far from where the other side is willing to go. This, of course, leads to the next point:
You have to be willing to walk away.
The biggest mistake I see is “falling in love.” This means you have to have the business, house, car, or deal, no matter what. If you fall in love with it, you lose all negotiating strength because you won’t say ‘no.’
There is a great deal of power in “walking away,” when its done right. As my client’s story shows, if you walk away and come crawling back, you’ll lose negotiating strength. You must be willing to stick with it and you can only walk away once or, maybe, twice.
Of course, you don’t have to be dramatic. You can merely state that you can’t do the deal unless the issue is resolved in your favor.
Finally, always go with your gut. If you feel uncomfortable, there’s usually a good reason. When the other side makes a take-it-or-leave-it-now offer, I’ve found its best to say no. My usual response is: “I have to think about it. But, if you need an answer now, it is no.”
If you consider each of these factors, you will negotiate from a position of strength and avoid being on the losing end of any deal.