Learning When To Walk Away From the Negotiation Table

Negotiation is a delicate process. Going too hard may cost you the deal while being too soft could cause you to leave money on the table. Knowing when to walk away is a skill built by practice, courage and timing, which can strengthen your position.

The best alternative to a negotiated agreement (BATNA), or the ability to walk away if negotiations fail, is seen by some as an overused tactic that doesn’t take into consideration the mutual dependence that exists in the negotiation and the hidden potential of the process. However, when talks are stagnant, a power move is necessary to elicit a breakthrough. 

Stages of Negotiation

There is no magic to negotiation. It’s merely a series of steps or stages consistently applied, and they include:

1. Preparation. This is the most important and neglected part of the process that sometimes uses a seven-step framework to strategize.

2. Exchanging and Validating Information. Both sides share information and explore their options.

3. Bargaining. This is where the give-and-take happens based on understanding value.

4. Concluding. Here is where you reach or don’t reach a commitment.

5. Execution. Follow through step only if Stage 4 yields an agreement.

The contract presentation is a factor throughout this process. Getting the details right and making sure that the counterparty is comfortable with how the contract looks plays a significant role in the desired outcome and should be an absolute priority. For the best possible presentation, consider having one complete file. You can merge PDF​ files to have all the important information in one document.

When To Walk Away

While the objective of negotiation is to get a deal, there are times when that may not be the best outcome because of the process itself or the context of the discussions. 

When Emotions Rule

Negotiating is an emotional process, but when you’re so focused on winning and not on the numbers or analysis to justify the process, this can lead to making bad deals. If you find that the emotions are getting too much bandwidth in the negotiation, it’s a good idea to step back.

When Dealing With Difficult People

Pride is another turning point when it comes to making the decision to walk away from the table. When you are dealing with people who are difficult and don’t seem to want to bend, pride may keep the negotiation going far longer than necessary because you don’t want to lose to this person. Unfortunately, this is where many squander time and money and wind up tarnishing their reputation. 

Poorly Defined Responsibilities

Presumptive business partners need to know what is expected of each party should things go wrong or who would handle government regulation violations. Contingency planning and liabilities are where the risk of loss skyrockets. Safeway's failed partnership agreement with Theranos — a company that collapsed after it became clear its product was fraudulent — is an example of catastrophic liability that justified Safeway walking away from the contract. Theranos kept missing deadlines, and despite the charm of its founder, the attitude toward the deal raised too many red flags. 

Hitting the Reset Button

Knowing when to walk away from contract negotiations changes the dynamic of the talks and your perspective. Sometimes, when you are able to operate from this position of strength, you become more aware of the outcome early in the talks.

To better understand the principles of negotiations, join your local chamber of commerce.