‘As a former crisis negotiator I was interested when you first posted the subject. I suppose one of the key messages that emerged from the article related to the ‘power of dependence’ – and this concept of power can be seen in concepts such as BATNAs & WATNAs – I often refer to the power of least dependence as it relates to negotiation theory – in simplistic terms we can see this in strengthening our BATNA and weakening the other parties BATNA. True engagement of the other party in integrative negotiation relies upon your ability to build their sense of dependence upon (and trust in) you to help them develop the best options/solutions to their problem.’

This is useful information for entrepreneurs who are new to this type of business deal or serious negotiations.

Really, leverage is such a small part of a negotiation. It can easily be used as a tactic by either side to confuse or distract. So you shouldn’t spend too much time focusing on it.

It’s better to view negotiation as a dance. One party moves and then the other one moves. Sometimes the moves don’t follow the same tempo, so you have to step away and determine whether coming back together to finish the dance is the right move or not. Based on the first offer and first counteroffer you can normally predict (to a surprisingly accurate range) where the price and terms will end up if an agreement is reached.

It’s important to go into any negotiation already knowing what your BATNA (Best Alternative to a Negotiated Agreement) and WATNA (Worst Alternative to a Negotiated Agreement) are, whether the other side prefers or typically uses an integrative or distributive style in negotiations and how much time you and the other party are willing to invest in the process.

Culture, Gender and Age of the parties are also other important factors to consider in a negotiation. This can help you figure out how both you and the other party view perceived power distance issues, the rules of the negotiations, how/when/where the negotiations are to occur, appropriate language to use or even language barriers you may face.

I tend to get concerned when someone says you need to wait for an offer from the other party first. You’re giving up a lot of power in the outcome by doing this. Although in some cases you have to wait for an offer, it’s very important that you find a way to create a price “anchor” in the mind of the other party first. You’ll find that by being the first person to make an offer (even if just as a hypothetical during conversation) it will give you a better position in the end.

You have to be willing to adapt to different styles and issues in negotiations, otherwise you will likely come out severely disappointed and unhappy with the outcome.

:dm

I tend to disagree with Kirill that a VC has more leverage by default. The fact that a VC looks at hundreds of companies per year changes little the VC’s leverage in a negotiation with a company they want to invest in. A VC offers terms and negotiates with very few of these hundreds of companies and for a reason. If a VC is offering to you, this is a clear indication they see value. As Nivi mentioned, there may be nuances as to why they see value. I will add my five cents here. Don’t make quick assumptions. Rather, make your best effort to understand what the VC values most in this transaction. This will not only improve your chances for closing a good deal but making it a win-win one. After all you will be partners for years to come.

You can’t just say “Well, now you want something from me. I am unhappy, now do whatever I want.”

@Scott: I think your argument should not be treated as a “But”, because the other way around you’ve got the same problem. If you have a lot of experience but nearly no theoretical knowledge you will be for sure better then a novice but far, far away from the best of your skills. So for example a well educated but unexperienced university student who tries to make his weekend project big, might actually have a real advantage over a 10 years experienced Angel who never learned anything about bargaining but from his experience.

I hope I can show why theoretical knowledge actually is highly valuable, experience or not. Another situation where I think theoretical knowledge might provide value even without experience:

Often you learn a lot more from each experience if you know better what to look for, how to interpret the reactions on the bargaining table and how to evaluate the quality of your result. From my own experience I know for example, that expert bargainers can make you actually feel good about making a really bad deal (for you, not for them), if you don’t know what they are doing or that they actually would try that. And thus without education your experience even might reinforce you in the wrong direction.

I was a year in China, where I could experience a lot more bargaining situations in every day life. People there try to trick you for every cent if they can. I think I learned a lot there, which I hadn’t if I never read anything here on venturehacks (when I started reading here I was as wet as pure water).