Excerpted from the article “Will Your Negotiation Make It to the Finish Line?” in the December 2020 issue of Negotiation Briefings, the Program on Negotiation’s monthly newsletter of advice for professional negotiators.
When it comes to closing the deal in negotiations, agreements sometimes fall apart for good reason. If one or more parties realize they could get better outcomes elsewhere or don’t see how they can work together in the future, there’s no sense in investing further time and effort. But when a draft agreement that would make both parties better off than their BATNA (best alternative to a negotiated agreement) collapses, we need a toolbox of negotiation closing techniques so we can write better endings in the future.
Consider what happened this past summer when the White House and the pharmaceutical industry buckled down to negotiate a long-awaited deal aimed at lowering the price of prescription drugs for Americans. With the 2020 presidential election looming, President Donald Trump was eager to fulfill a promise he’d made during the 2016 campaign. As for drugmakers, they wanted to rise above public perceptions of them as price gougers.
In late August, the parties reached a tentative agreement for the industry to contribute $150 billion to defray consumers’ out-of-pocket costs and to cover older Americans’ copayments in Medicare’s prescription drug program. Then Mark Meadows, Trump’s chief of staff, issued a final demand: The White House wanted drugmakers to pay for $100 cash cards to be mailed to American seniors before the election, to the tune of several billion more dollars, the New York Times reports. Seniors could use the “Trump cards,” as some in the pharmaceutical industry referred to them, to pay for prescriptions.
But the drug companies refused, unwilling to become complicit in what appeared to be a blatant play for votes—and the deal collapsed.
The question of how to close a deal successfully can hinge on whether negotiators effectively balance the competitive and cooperative elements of deal making. Consider what happened in February when billionaire hedge fund manager Steven Cohen negotiated to purchase Major League Baseball’s (MLB’s) New York Mets from its majority owners, the Wilpon family, for about $2.5 billion. In a highly unusual move, managing owner Fred Wilpon and his son, Jeff, the team’s chief operating officer (COO), also negotiated to keep their jobs for the first five years of Cohen’s ownership.
Cohen reportedly believed the Wilpons planned to take on more ceremonial roles with the team. After all, Fred was in his 80s and had already planned to step back from daily duties. Moreover, other family members were said to have initiated the sale to take decision-making authority away from Jeff Wilpon, given that the team was hundreds of millions of dollars in debt and operating in the red. The Wilpons were widely unpopular among Mets fans for failing to make the major financial investments needed to build a strong team.
But after seven months of negotiation, when Cohen sat down to hammer out the details of the five-year transition period, the Wilpons refused to sign anything that would give him gradual control, according to the New York Post. In fact, they wanted new language stipulating that Jeff would remain COO during that time and be guaranteed pay raises and perks. Jeff had no intention of stepping back from his duties, Cohen suddenly understood. He reportedly tried to negotiate a slower payout or a lower price in return for meeting the Wilpons’ demands, but they refused.
As it turned out, the Wilpons have a history of making last-minute demands in negotiations with business partners, government officials, and even baseball players. It’s a tired tactic that can be replaced with far more effective negotiation closing techniques.
To find out how these stories resolved and get our advice on closing the deal in negotiations, subscribe to Negotiation Briefings. Our December issue covers:
- how to close a business deal
- crisis negotiations in the Covid-19 era
- new research on brainstorming in negotiation
- expert advice from a new book on how to negotiate thorny issues with your kids during the pandemic
The Program on Negotiation’s monthly newsletter of advice for negotiation practitioners, Negotiation Briefings, will help you more effectively resolve conflicts, build stronger agreements, and get great deals done. Subscribe today!
What advice do you have for closing the deal in negotiations?