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Recently, a friend and business-owner casually asked my advice about negotiating. Currently, she is in the midst of thinking through a strategy related to the sale of a piece of real estate. As we were talking, the question came up: Is establishing the lowest acceptable price an effective approach?
In the well-known negotiating classic, Getting to Yes, authors Roger Fischer and William Ury do a terrific job of articulating the exact goal of all negotiation techniques and strategy. Good negotiating skills, they write, can protect you from making an agreement you should reject and help you make the most of your assets so that any agreement you reach will satisfy your interests.
According to these authors, the most significant tool for accomplishing these two objectives is not in fact, establishing a bottom line or worst acceptable outcome, but rather; establishing your best alternative to a negotiated agreement.
They claim that while establishing your worst acceptable outcome may help you avoid agreeing to something you shouldn’t, it may also keep you from inventing and agreeing to a solution it would be wise to accept. Why? Because a bottom line limits your ability to benefit from what you learn during the negotiation, inhibits your ability to invent an imaginative solution, and is likely to be set too high.
In any case, in most circumstances, the real danger is that you are too committed to reaching an agreement. Fischer and Ury clarify that your best alternative to a negotiated agreement is the standard against which any proposed agreement should be measured. Most people think that they will try to reach an agreement and only then, will they research and develop alternatives. However, this tried and true classic states that having a good alternative not only enables you to determine what is a minimally acceptable agreement, it will probably raise that minimum. And the more easily and happily you can walk away from a negotiation, the greater your capacity to affect its outcome.
Let us know your best negotiating tactics in the comments!
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.