When to walk away from a negotiation

Walking away from a negotiation is a tricky thing to learn or to teach. So much of it is based on experience and a deep understanding of human dynamics. However, there are a few key actions a negotiator can take to make a proper assessment on when to stand and walk out.

If you walk away from a negotiation, you must be willing (and able) to live without the deal. It simply cannot be used solely as a tactic in the hopes of moving the needle. If you need to initiate a reconnection after walking out, you will significantly lessen your overall power in the negotiation.

Walking out while negotiating generally serves two purposes:

Positioning: It sends the message that you are willing to walk out and have better options than to move forward. It can only be used effectively once per negotiation and on a clearly contentious issue. Some people use this regularly as a negotiation strategy but studies show no clear long-term benefit. It typically wastes time and builds resentment, making the deal much harder to finalize.

It does have the advantage of revealing the strength of the other side’s BATNA (Best Alternative To a Negotiated Agreement). The other side will typically request a reactivation of the negotiations if no other options exist. Take for example a company which is running out of cash and are negotiating for a loan with a single entity. They will usually seek to resume negotiations following a walk out; information that provides additional leverage for a better deal.

You may also use the strategy when you have information about the other side’s alternatives and it’s clear they are posturing. This will help move the ZOPA (Zone Of Potential Agreement) far more closely to a desired target area.

However in negotiations where a narrow ZOPA exists, it may be impossible for the other side to show willingness to return without losing face. The key in all negotiations is research and planning. The more you know, the more you can adjust to the flow of the exchanges with effectiveness.

Time: As in to save time. Generally if we walk, we are gone for good. It’s because our ZOPA was simply not on target or it’s clear the other side is negotiating in bad faith. Far too many negotiators remain at the table when it’s evident that a deal is not likely to ever be reached. This is because they are afraid to lose the effort (and money) invested to date. This must not be a reason to remain at the table.

The best way to identify wether you will be wasting your time is by identifying your Reservation Point (RP) in the negotiation preparation. This is the line you will not cross no matter what the situation and must be identifies prior to beginning a negotiation. Remember that this is not the goal you wish to reach but the rock bottom (or top) you are willing to accept.

As an example, say you want to sell your used car and set a goal of $7,500. You might list it aggressively at $8,500 (it’s called anchoring) and work the negotiation plan to get a maximum result. This might include having the ability to wait to sell it or be willing to keep it for awhile longer (more BATNA the better). However, you have identified in advance that the lowest you would accept is $6,000 (that’s your RP) and the person counters with $5,000. After back and forth the person says the best they can do it $5,800. You should walk because a strong negotiator never, ever crosses their Reservation Point. Ever.

Sometimes the best deals you will ever make are the ones you never finalize.

If the other party is willing to adjust their offer to fit within your range, then allow them to reactivate their participation.

If you are going to walk out make sure you have other options and you’ve clearly identified your goals. Walking out should be a planned manoeuvre and not a spontaneous one.

Here are a few additional tips:

  • Never reveal your RP or BATNAs
  • Never give ranges (I’m looking between $7k and $8K). Instead anchor aggressively: “It’s priced at $8,500”.
  • Never split the difference

Should you choose to walk out, be sure to be courteous and polite. People will remember the manner in which you exited a negotiation far more than the actual reason for doing so.

Keeping a strong reputation as a negotiator will benefit you over time.

Negotiate away!

On twitter: @levesquenego

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