#Negotiation101 - When to Take the Deal
Negotiators often take it for granted that if they bring a lot of value to the table and have sufficient leverage, they'll be able to strike a great deal.
"Should I accept the offer?" I don't want to live with any regrets. It appears to be excellent, but I could be leaving a lot on the table. "How should I proceed?"
This is a frequently asked question. What should you do?
1. Does it satisfy your fundamental goals and interests?
Return to the beginning of the negotiation and assess whether the agreement meets your fundamental goals and interests. What did you hope to achieve and why?The more your goals and interests are met, the more likely you are to accept the deal. The less satisfied they are, the more you should engage or simply walk away.But don't be avaricious. Pigs get fat, hogs get slaughtered, as the saying goes.
2. Is the deal better than your current Plan B?
What will you do if you do not complete the transaction (Plan B if the transaction is Plan A)? Take the deal if it is better than your Plan B. If not, take a walk.Consider how much better or worse your deal is than Plan B. If the offer is significantly better, it may be risky to continue negotiating. You may want to push for more depending on your risk tolerance. However, consider the risk.If the deal is significantly worse than your Plan B, keep going if you believe you can get a significantly better offer. Except for your time, there is little risk here.Plan Bs can also change, which may or may not be within your control. Keep negotiating if your current Plan B is worse (suggesting you should accept the deal), but you expect a better one soon (such as a more appealing offer from another bidder). Timing is crucial. You can't predict the future, but you can make educated guesses and weigh the risks of continuing to converse.
3. What can you discern about your counterpart’s Plan B?
When you know your counterpart's Plan B is worse than what you've already offered, there's often little downside to trying to get more.Of course, skilled negotiators almost never admit to a worse Plan B because it reduces their leverage. They may even go to great lengths to conceal or lie about it (classic bluffing).When considering their Plan B, pay close attention to their words and actions. Pay attention to what they say and don't say as well. If they have an excellent Plan B, they will almost certainly share it. If the situation is bad, they will almost certainly keep their cards close to their vest.Bottom line: If you have a bad Plan B and your counterpart's Plan B appears to be at least as good as what's on the table, don't push too hard.
4. Do the offer-concession patterns suggest the end is near?
Because offer-concession patterns are common in negotiations, sophisticated negotiators track when and how far the parties move. They can reasonably predict when their negotiation will end based on these patterns.For example, plaintiffs' personal injury lawyers frequently begin with an extremely high demand, and insurance lawyers frequently respond with a lowball offer. The parties then typically go back and forth for a fairly predictable period of time before settling.Knowing this, both parties frequently wait until the end of this "dance" to decide whether to settle or go to trial.Other negotiation environments have patterns as well, though they usually differ. I recently advised on the sale of a company, and the owner was well aware that the auction for his company would only involve a few moves and would end near a predetermined inflexible deadline.
5. Should you consider how long you have negotiated and who “won”?
"We've been negotiating for weeks, and it will be a waste if we don't close the deal." Almost everyone has heard or experienced this. Here's the deal: ignore this sensation! This is psychologically powerful, but it is invalid as a criterion for signing.Also, disregard who "won" or "lost" and who conceded the most. This is ego talking and has little to do with whether or not to sign. Many good deals have failed due to the egos of the parties involved.
Ms. Jharna Jagtiani is an Assistant Professor at IFIM Law School. She is a qualified lawyer and a certified mediator by the Indian Institute of Corporate Affairs under the aegis of the Ministry of Corporate Affairs – GOI. She is a mediator & online dispute resolution consultant. As an independent practitioner, her work involves assisting start-ups, small and medium-sized enterprises to set up their internal management and consumer dispute resolution system. In the year 2016, she became the Co-founder of Prerna Foundation – a socio-legal initiative started with an objective to ease access to justice for people at large. She is also a Startup Consultant at Pixilets. Recently, she has been awarded the “Nari Shakti Samman Award” for women's empowerment – by helping women entrepreneurs to start grow and sustain their dream ventures at Jan’ki Conclave and Award 2021 - 2022.