Editor's Note: We asked America's top negotiating pros--Kenneth Feinberg, Kevin O'Leary, Leigh Steinberg, Richelieu Dennis, and Eugene Driker--to share their haggling tips and strategies so you can ramp up your dealmaking game.
A shark walks.
When investor and Shark Tank star Kevin O'Leary and his partners decided to sell their real estate business, they jointly agreed the lowest amount they would accept was $80 million. O'Leary, the designated negotiator for the deal, presented the other side with an opening ask of $120 million. The buyer countered with a number below the minimum they'd set, and O'Leary replied that he was no longer interested.
Days later, the buyer came back with a higher offer, but it still wasn't enough. O'Leary left the table again. A third time, the buyer called back, and a third time, O'Leary walked away. All this, despite the fact that O'Leary and his partners didn't have other options. "There was no other offer," O'Leary says. If we didn't reach a deal, we were holding onto the company."
Finally, the buyer countered with a number O'Leary and his partners could accept: $112 million. "It was discounted from the $120 million we wanted, but it wasn't $80 million, either," he says. "Many people fear the abyss. They don't know what's going to happen if they leave the only offer they have. But if you're going to tell the other side you're walking away, you have to actually have the balls to do it."
Know the least you'll accept.
"You should go into every negotiation knowing what the minimum is that you're willing to take," says bargaining educator Melissa Thomas-Hunt, "and knowing what it means if you do not accept a deal with this particular partner. What am I going to do instead? What are the implications, financial and otherwise, and can I live with them?"
Having a BATNA has worked well for Tiffany Pham, CEO of Mogul, a women's news aggregation site that makes part of its revenue by creating content for brands like Avon and Captain Morgan. "We still discuss each deal internally before walking away," she says, "because we want to think about the long-term value that partnership would bring." But she's more than willing to walk if the price isn't right. When a jewelry company offered Mogul less than its minimum price for a project, Pham replied that she wasn't interested. The jeweler came back to the table and agreed to her terms.
Identify your options.
One of the biggest determinants of power, says negotiation expert Alison Fragale, is each side's BATNA. "If your real-world alternative isn't great," says Fragale, "you have to manufacture one the best you can."
Know your opponent's attitude.
How willing is he or she to play hardball? asks Thomas-Hunt. If this person is prone to walking away, she says, "you have to very gently allude to your other options, without its being perceived as a threat."
Don't back off.
"If you make an ultimatum and then back off it," says professional mediator Paul Monicatti, "that detracts from your credibility." Pham says she's gotten good at sticking to her guns. "Every time we've walked away," she says, "the brand on the other side of the negotiation has come back."