Power Negotiations ◾ 163
seeking funds. Angel groups have developed a unied agenda for meet-
ing with all prospective clients, and thus start with a huge advantage, even
before the negotiations take place. There are four distinct roles performed by
an agenda:
1. Roadmap for meeting sequence
2. Names and titles of attendees
3. Communication of important issues to be discussed
4. Standard by which to measure success or failure of negotiations
8.6.1 Preparing the First Draft of Any Document
Every lawyer knows the strategic advantage of preparing the rst draft of
any legal document. The rst draft is heavily tilted in favor of the drafter,
placing the recipient in the disadvantageous position of having to make the
document more balanced.
Whether it is a questionnaire, a Letter of Intent, or subsequent
documents, the party preparing the rst draft starts with an unquestioned
advantage. If possible, the entrepreneur should insist on having his or her
legal counsel write the crucial rst draft of any document destined for a
negotiation to ensure a more balanced approach.
The entrepreneur needs to be in constant touch with legal counsel in
drafting the document, and not to assemble a committee. Remember that
the easiest way to kill a deal is to get a committee working on it.
Essentials of Success Planning
Target Point (TP)
– aspiration value
Resistant Point (RP)
– no further concessions are possible
Zone of Possible Agreement (ZOPA)
– Optimal for both parties
BATNA Best Alternative to Negotiated Agreement
– power to walk away
WATNA Worst Alternative to a Negotiated Agreement
Figure 8.6 Essentials of success planning—Become familiarized with success
planning terminology.
164 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
8.6.2 Measuring Success
“I will pay you anything you want, as long as I set the terms.”
How do you know you have achieved success (or have failed)? What is your
yardstick? In preparation for negotiations, assemble your team and set the
following initial parameters, as shown in Figure8.7.
8.6.3 Negotiation Strategies
Harvey Mackay, the nationally syndicated columnist and author of the New
York Times #1 bestseller Swim with the Sharks without Being Eaten Alive,
13
has the following admonitions:
◾ Start with your negotiations with a problem-solving attitude.
◾ Never accept any proposal immediately, no matter how good it sounds.
◾ Never negotiate with yourself. You will furnish the other side with
ammunition they might never have gotten themselves. Don’t raise a bid
or lower an offer without rst getting a response.
◾ Never accept a deal with someone who has to “go back and get the
boss’ approval.” Deal with decision makers only.
◾ Just because it may look nonnegotiable, doesn’t mean it is. In business,
“standard contracts” are not adhesion contracts.
Entrepreneur
TargetWATNA
Resistance
BATNA
Negotiated value at a glance
Target
Resistance
WATNA
Other Party
Zone of Possible Agreement
Figure 8.7 Negotiated value—Parameters used to set success expectations.
Power Negotiations ◾ 165
◾ A promise is a concession. It has a discount rate.
◾ Do your homework before you deal. Learn as much as you can about
the other side. Instincts are no match for information.
◾ Beware the late dealer. Feigning indifference or casually disregarding
timetables is often just a negotiator’s way of trying to make you believe
he or she doesn’t care if you make the deal.
◾ A deal can always be made when both parties see their own benet in
making it.
◾ A dream is a bargain no matter what you pay for it. Set the scene. Tell
the tale. Generate excitement. Help the other side visualize the benets,
and they will sell themselves.
◾ Make only deadlock-breaking concessions.
◾ Always strive for closure.
◾ Remember that satisfaction is the present value of future benets
compared to other choices.
The overarching negotiation strategy is the creation of future benets, as
depicted in Figure8.8.
e Basis for Negotiation
Creation of future value and benets
Anticipated future value and benets
Current fair market value
Potential to create
or destroy value
thru negotiations
Value and Benets
Figure 8.8 The basis for negotiation—Creation of future value as your basis for
negotiations.
166 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
8.6.4 Negotiation Styles
Professor Shell
14
identied ve styles/responses to negotiation. Individuals
can often have strong dispositions toward numerous styles; the style used
during a negotiation depends on the context and the interests of the other
party, among other factors. In addition, styles can change over time, that is,
negotiation styles are situational.
1. Accommodating: Individuals who enjoy solving the other party’s prob-
lems and preserving personal relationships. Accommodators are sensi-
tive to the emotional states, body language, and verbal signals of the
other parties. However, they can feel taken advantage of in situations
when the other party places little emphasis on the relationship.
2. Avoiding: Individuals who do not like to negotiate and don’t do it
unless warranted. When negotiating, avoiders tend to defer and dodge
the confrontational aspects of negotiating; however, they may be
perceived as tactful and diplomatic.
3. Collaborating: Individuals who enjoy negotiations that involve solving
tough problems in creative ways. Collaborators are good at using nego-
tiations to understand the concerns and interests of the other parties.
However, they can create problems by transforming simple situations
into more complex ones.
4. Competing: Individuals who enjoy negotiations because they present
an opportunity to win something. Competitive negotiators have strong
instincts for all aspects of negotiating and are often strategic. Because
their style can dominate the bargaining process, competitive negotiators
often neglect the importance of relationships.
5. Compromising: Individuals who are eager to close the deal by
doing what is fair and equal for all parties involved in the negotiation.
Compromisers can be useful when there is limited time to complete the
deal; however, compromisers often unnecessarily rush the negotiation
process and make concessions too quickly.
Figure8.9 shows the ve negotiating styles.
8.6.5 Negotiation Tactics
15
Tactics are always an important part of the negotiating process. However,
tactics do not often jump up and down shouting, “Here I am, look at me.”
Power Negotiations ◾ 167
If they did, the other side would see right through them and they would
not be effective. Frequently they are subtle, difcult to identify, and used
for multiple purposes. Tactics are more frequently used in distributive
negotiations and when the focus is on taking as much value off the table as
possible. Many negotiation tactics exist. Following are a few commonly used
tactics.
Auction: This bidding process is designed to create frenzied competi-
tion.
16
When multiple parties want the same thing, pit them against one
another. When people know that they may lose out on something, they will
want it even more. Not only do they want the thing that is being bid on,
they also want to win, just to win. Taking advantage of someone’s competi-
tive nature can drive up the price. An auction does not work when your
counterpart demands a “no shop” provision.
Brinksmanship: Secretary of State John Foster Dulles under the
Eisenhower administration coined the term brinksmanship during the Cold
War. One party aggressively pursues a set of terms to the point at which the
other negotiating party must either agree or walk away. Brinksmanship is a
type of “hardball” approach to bargaining in which one party pushes the other
to the “brink” or edge of what that party is willing to accommodate. Successful
Unassertive Assertive
Assertiveness
Uncooperative Cooperative
Cooperativeness
Competing
(dominating)
Collaborating
(problem solving)
Avoiding
(nonconfrontational)
Accommodating
(preserving
relationships)
Negotiating styles at a glance
Compromising
(eager to close)
Figure 8.9 Negotiating styles—Your negotiating counterpart will likely t one of
these styles.
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