BATNA Basics: Boost Your Power at the Bargaining Table
1. Assess your BATNA using a four-step process.
It was a classic case of a business partnership gone awry.After building a profitable construction company together over several decades,Larry Stevenson and Jim Shapiro recognized that their differences had become irreconcilable.Stevenson wanted to buy out Shapiro,who was willing to sell for the right price.After months of haggling and legal maneuvering,Stevenson made his final offer:$8.5 million for Shapiro’s shares in the company.
The company is worth about $20 million,Shapiro thought to himself.I own 49% of the shares.Heck,I helped build this company.I’m not going to accept anything less than my fair share—$10 million.I’d rather fight in court than accept $8.5 million. Shapiro rejected the offer,and each party prepared for a trial.Shapiro’s rationale for rejecting Stevenson’s offer seemed reasonable enough.Furthermore,Shapiro’s lawyers assured him,a court ruling very likely would be in his favor.Yet Shapiro made the wrong choice.He could have figured this out if he had assessed his BATNA—his best alternative to a negotiated agreement.A negotiator’s BATNA is the course of action he will pursue if the current negotiation results in an impasse.An evaluation of your best alternative to a deal is critical if you are to establish the threshold at which you will reject an offer.Effective negotiators determine their BATNAs before talks begin. When you fail to do so,you’re liable to make a costly mistake—rejecting a deal you should have accepted or accepting one you’d have been wise to reject.