Thoughts on Tech, Deals, and Markets

The Best Negotiating Tactic

with one comment

As an M&A advisor, negotiating is a critical part of my job.  I’m often asked about what it takes to be a good negotiator.  There’s a stereotype of the negotiator as cool in the most tense situations, with quick wits and silver tongue.  Throw the good negotiator into the diciest of situations and they’ll pacify it, leaving with pockets brimming with whatever loot they could carry.

Composure and eloquence under pressure don’t hurt, but focusing on that as the defining factors of good negotiations is way off the mark.  The most important dynamic in any negotiation is alternatives.   If you want a raise at your current job, the best way to get one is to let your boss know you that you are seriously considering an attractive offer from another company.

A friend of mine felt he was due a promotion, but it wasn’t forthcoming.  So, he interviewed around and just got a offer from a competitor that comes with higher comp and a better title.  He told his employer that he was going to take it, though hadn’t signed anything yet.  Guess what?  They are offering him that promotion.

My friend has been an extremely effective negotiator with his current company.  Yet it required neither manipulation nor deceit.  What he did was simple.  He improved his alternative, then was transparent with the other side in his negotiation.   It’s that simple.  The best negotiating tactic is to improve your alternatives.  (Another key point:  honesty pays.)

Some might wonder if that tactic can backfire.  What if you improve your alternative, then tell the opposing side of the negotiation, and they say ‘go to hell.’  You might not have actually wanted that alternative, but now you’re stuck.  In that case, you learned something about your original option–it’s not as good as you thought.  If it’s in a negotiation with your employer, you now know that your employer isn’t interested in giving you fair market value (and is probably a prick).  So you’re better off taking your alternative.

Written by sandykory

January 11, 2009 at 4:29 am

Posted in Uncategorized

One Response

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  1. […] a comment » As I’ve written previously, options are critical in negotiations.  In any negotiation, both sides should brainstorm options […]


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