How to Avoid Negotiation "Dead Ends"


Have you ever gotten stuck in a negotiation?

Sometimes, after weeks or months of ongoing negotiations, you can reach a point where neither side is willing to concede on a term. And the negotiation comes to a crashing halt.

But if the deal dies on the table, both sides lose. Elite negotiators know how to push for their terms without hitting a "dead end" and jeopardizing the entire deal.

Watch today's video to learn how:

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Video Transcript

Remember when cars didn't have electronic fuel gauges?

There was just a thin little needle that swung from full to empty and it was up to you to figure out how far you could go before you ran out of gas.

Growing up in the 70’s and 80’s, fuel was like gold. So I quickly developed an intuition for just how much I could push that needle below "E" before I ran out of gas and had to call home for help.

Little did I know that that very same skill set would serve me well in high-stakes negotiations involving millions of dollars.

So what happens when negotiations run out of gas?

Unlike a car, when your negotiations run out of gas you can't simply get out and keep walking in the same direction.

If you reach an impasse (a real impasse, not something being used for leverage or positioning) and neither side is willing to concede on the point, you're done.

Any further discussion on that point shows that it was never really a deal-breaker... or worse, the side that's willing to concede doesn't understand the implications for them in the deal.

We've talked in the past about how negotiators should translate the requirements of the party they're representing in negotiations.

But it's equally - if not more - important to understand the breaking point — both for your party and the folks on the other side of the table.

Luckily, the breaking point usually boils down to one or more of the following:

  • What’s the number?
  • What are the non-negotiable terms?
  • What’s the drop-dead date?

Knowing the breaking point in a negotiation can be the difference between caving under pressure and staying firm on what you know you can get in the deal.

Here's how to figure it out:

#1 - What's the number?

Most negotiators will spend some time up-front understanding what their party's not-to-exceed number is.

But the really good negotiators will try to figure out the other side's number as well.

For buyers, figuring out your side's number shouldn't be too difficult.

Figuring out the seller's number is a little trickier, but not impossible.

It just requires a little more research.

Things like market rates, competitive bids, and annual sales will help determine how low a supplier is willing to go before they consider walking away.

#2 - What are the non-negotiable legal terms?

The reality is that most standard legal terms are one-sided in favour of the party that drafted them, which means they're fair game in a negotiation.

The real trick is to figure out how much you can modify a legal term in your favour before it becomes unacceptable for your counterpart.

That's because corporate lawyers, by their very nature, are risk averse. Their mandate is to protect the interests of the organization and mitigate as much risk as possible in a contract.

The problem is, the other side also has corporate lawyers trying to do the exact same thing for their organization.

That is why we should keep the lawyers at the back table in our negotiations.

But that doesn't mean we should dismiss legal terms as being over-cautious, or accept them as gospel.

Instead, try to understand what specific risk is being mitigated by a particular clause and then negotiate that clause to a point where the risk is still being mitigated but not at the expense of the overall deal.

#3: What's the drop-dead date?

How many times have you heard that a contract has to be signed by the end of the month, or the quarter, or the year?

The problem is that most organizations don't know what's driving them to that date, so they pressure their negotiators to get the deal done and end up leaving real value on the table.

I understand that time is money... but in negotiation, the relationship between time and money is subjective at best.

I've lost count of how many times my clients have told me that a deal needed to be done by a certain date, but they couldn't give me a reason as to why.

In most cases, timelines in a negotiation are driven by the supplier's need to close a deal and book revenue before the end of a quarter or a year.

However, there may also be cases where a delay in the acquisition of goods or services could have an impact on a project or customers.

When you're given a date by which to get a deal done, you should ask what will happen the day after if the deal isn't done.

If the answer is something along the lines of "well, the supplier won't offer the same discount", you can rest assured that you can push as close to that date as you want without creating any real risk in the deal.

However, if there are real downstream impacts, you should create your negotiating strategy accordingly.

At the end of the day, your job as a negotiator is to get the best possible deal with the least amount of risk.

Understanding the breaking point for each side will help you structure your strategy achieve that goal.

Next up, the 7th and final skill – Planning, planning, and more planning.

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