Look beyond an unsatisfying compromise for a win-win deal.
It’s common to find ourselves in a negotiation deadlock at any time. Loggerheads happen because we enter negotiations with our own set of expectations, just as the other party does. If we’re selling something, we know how much we want to charge. Meanwhile, the Buyer has a price in mind that they’re willing to pay, which is often less than what we want to sell for. The result? Deadlock.
The most common way to break a negotiation deadlock is to find a middle ground—a compromise that leaves both parties with some discomfort. For instance, if you wish to sell your company for $10 million and the Buyer is offering $8 million, you might settle on $9 million. Neither of you received exactly what you hoped for, but at least you achieved a resolution.
But what if there was a way to break the deadlock in which both of you came out of the deal feeling like winners?
That’s where thinking creatively comes into play.
Beyond Black & White Solutions
I remember a mediated negotiation, and the first thing the mediator said was, “If you want to reach a deal, you aren’t going to get as much as you want, and you aren’t going to pay as little as you think.”
In other words, he was warning us that we would end up in a deadlock unless we were willing to compromise. The mediator was planning for a typical lose-lose negotiation.
However, often there are additional levers and concessions available to us that may not be apparent unless we use some creativity to broaden the range of potential concessions to secure a deal. And to do that well, you need to be listening for areas where you can potentially open up the negotiation in new and interesting ways—often beyond price.
For example, we recently had a client who was attempting to purchase a company in the metal fabrication space. The seller was an older gentleman preparing to retire. But his son also worked in the business, and the seller wanted to keep that going. The seller was also very proud of the brand reputation he had built for his company, which gave him pause about selling it.
The Buyer agreed to two concessions when purchasing the business. First, he decided to keep the seller’s son on as an employee for at least two years. Second, the seller agreed to keep the business running under the existing brand for at least one more calendar year. That was enough to get the deal over the finish line. Interestingly, these two concessions cost relatively little but mattered a lot to the seller. The Buyer was able to secure a price concession on two relatively unimportant items.
It’s important to note that the Buyer probably would kept his son as an employee, at least for a transition period. The Buyer also recognized the value of the seller’s brand and might have continued to support it. However, by addressing the seller’s concerns, the Buyer used his insights to reach a creative solution beyond the selling price, turning a potentially deadlocked negotiation into a successful outcome for everyone involved.
Listening Creatively
The key to finding creative solutions to sticky negotiations is listening to what matters to the person or people you are negotiating with. Intense listening and questioning to build your understanding of motivations will help you reach concessions that deliver the breakthrough you’re seeking without breaking the bank.
A great example of this idea in action comes from a negotiation I was involved in while purchasing a business. When we got stuck on the price I was willing to pay, I asked a few questions and discovered that the seller was concerned about how the sale proceeds would affect his tax obligations. Noticing this, I suggested helping to lower his tax burden by paying his price over several years—essentially creating an annuity for him. In this way, he received his price and maintained a lower annual tax burden. I got my price, and he got his lower taxes.
The beauty of this concession was that it worked well for me, too. By agreeing to pay over time, I planned to fund the business with the profits I generated from the company rather than paying the purchase price out of my own pocket.
This shows how both sides can benefit when you take the time to understand the other side in a negotiation.
When negotiating a deal, a great starting point for your strategy is to ask questions. If you don’t engage in a conversation about what both parties value in the deal, you’ll miss the chance to discover creative concessions that can help lead to win-win agreements that extend beyond a mere compromise.
