Mike Tyson once said "Everybody's got a plan--until he gets hit." In negotiating a deal, we need a plan that survives the stress of the first encounter and continues to add value throughout the negotiation process. We need to plan both defensively, against common ploys, and offensively, to push our agenda forward.
One of the most effective negotiating ploys is serial negotiations. Issues are presented individually, and you are pushed to reach a solution on each one before moving on to the next. The problem is, you don't know at the beginning how many issues there will be, and which ones will be important to you. Your response on the offense should be to ask for all the issues to be put on the table first, so that you understand all of them. Then you can reshuffle them, making sure that you stage the issues so that the buyer can win one you care little about, and then you can win one that is important to you. Inevitably, you will be left with a few big ones to hammer out, but at least you won't have given away too much.
Another ploy that is often effective is the bad news/good news ploy. Here, a negotiator outlines a doomsday scenario under which your entire deal falls apart due to one major problem... and then proceeds to give you the good news--a compromise in which you are asked to give away substantial concessions. Here is an example from a recent deal: A buyer had agreed to purchase our client at an agreed price, but then learned of a patent that our client was arguably infringing. The buyer opened negotiations by describing a worst case scenario in which the patent owner gets a temporary restraining order and puts our client out of business. Clearly, he argued, it would be in our clients interest to cut their price by 30% to compensate for the patent risk.
On closer examination, we discovered that the patent holder had recently lost an infringement case, and was now being acquired by a company that had never tried to enforce its patents against anybody. Rather than cut the price, we threatened to walk from the deal and ultimately moved forward at the negotiated price.
A version of this article originally appeared in Softletter and Software Success.