“Should I take the deal? I don’t want any regrets. It seems great, but I could be leaving a lot on the table. What should I do?”
I get this question a lot. How should you decide?
1. Does it satisfy your fundamental goals and interests?
Go back to the beginning of the negotiation and evaluate whether the deal satisfies your fundamental goals and interests. What did you want to accomplish and why?
The more your goals and interests are satisfied, the more likely you should take the deal. The less they are satisfied, the more you should keep engaging or just walk away.
But don’t be greedy. Remember the saying – pigs get fat, hogs get slaughtered.
2. Is the deal better than your current Plan B?
What will you do if you don’t do the deal (your Plan B if the deal is Plan A)? If the deal is better than your Plan B, take it. If not, walk.
Also evaluate how much better or worse your deal is than your Plan B. If it’s a lot better, it could be quite risky to keep negotiating. Depending on your risk appetite, you might want to push for more. But calculate the risk.
If the deal is a lot worse than your Plan B, keep going if you think you can get a much better offer. Little risk here, other than your time.
Plan Bs also can change and this may or may not be in your control. If your current Plan B is worse (suggesting you should take the deal), but you expect a better one shortly (like a more attractive offer from another bidder), keep negotiating. Timing matters. You can’t predict the future, but you can make educated guesses and consider the risk in continuing to talk.
3. What can you discern about your counterpart’s Plan B?
There’s often little downside in trying to get more if you know your counterpart’s Plan B is worse than what you have already offered.
Of course, skilled negotiators rarely admit to a worse Plan B as it weakens their leverage. They may even go to great lengths to obscure it or even lie about it (classic bluffing).
So really carefully listen and observe their words and actions when exploring their Plan B. Also pay close attention to what they say and don’t say. If they have a great Plan B, they will likely share it. But if it’s bad, they will almost certainly hold their cards close to their vest. (If you think they might be lying, read my column on “Clues that suggest a person may be lying.”
Bottom line: don’t push too hard if you have a bad Plan B and your counterpart’s Plan B appears at least as good as what’s on the table.
4. Do the offer-concession patterns suggest the end is near?
Sophisticated negotiators track when and how far the parties move as they know that offer-concession patterns often exist in negotiations. Based on these patterns, they can reasonably predict when their negotiation nears the end.
For instance, plaintiffs’ personal injury lawyers often start out with a super high demand and insurance lawyers often counter with a lowball offer. The parties then go back-and-forth over a fairly predictable length of time before they typically settle.
Knowing this, both parties often wait until near the end of this “dance” to ultimately decide to settle or go to trial.
Patterns exist in other negotiation environments, too, although they usually differ. I recently consulted on the sale of a company, and the owner knew that the auction for his company would only involve several moves and end right near a preset inflexible deadline.
5. Should you consider how long you have negotiated and who “won”?
“We’ve spent weeks negotiating and it will be a waste if we don’t do the deal.” Almost everyone has heard or felt this. Here’s the deal – ignore this feeling! This is psychologically powerful but illegitimate as a criterion concerning whether to sign.
Also ignore who “won” or “lost” and who conceded more. This is ego talking and has little to do strategically with whether to sign. Many good deals have gone down the tubes based on parties’ egos.
Latz’s Lesson: Whether you sign should depend on fundamental goals and interests, the deal’s value relative to your Plan B and your knowledge of your counterpart’s Plan B, and offer-concession patterns.