Negotiation: Be Aware of Leverage and Deal Momentum Shift
Topic 74 explores the notion of leverage, an advantage held by one party versus the other party in a deal negotiation setting. In addition, this Topic explores deal momentum and how it tends to change sides as a deal progresses to conclusion.
LEVERAGE: IF YOU HAVE IT, USE IT (APPROPRIATELY)
- Leverage in negotiations is a known advantage held by one party versus the other party. It emanates from a tangible or intangible possession held by the first party that the encumbered party desperately needs to possess or eliminate and can obtain such satisfaction only from the first party.
- For example, such leverage can be in the form of intellectual property advantages or customer or contractual advantages enjoyed by one party that the other party deeply desires.
- Leverage is also knowledge of something the encumbered party does not want revealed to others; if so revealed, the information may inure to the encumbered party's detriment if action is not taken to eliminate the knowledge encumbrance.
- For example, such leverage can be in the form of knowledge that a third party is about to enter a market with new technology that will impair the encumbered party unless the encumbered party joins with the knowledgeable party.
- Either way, the holder is in a position to extract a certain value from the other party in exchange for elimination of the leverage overhang. It must do so legally, without causing ill will or embarrassment. ...