When to walk away from a negotiation: The take-it-or-leave-it strategy

When to walk away from a negotiation: The take-it-or-leave-it strategy

Negotiating a contract is a delicate process that requires skill, patience, and a keen sense of understanding the situation. Certain red flags should signal it's time to cut your losses, whether you're negotiating a business deal, employment terms, or a service agreement.

Negotiating can be an exhausting process, especially when it feels like you're constantly defending your position. It's essential to set a bottom line—whether it's related to time, money, or value—to avoid putting yourself in a position that you’re not being able to support. If you’ve read the book ‘Never Split the Difference’ by Chris Voss - a former FBI hostage negotiator, he reveals in his book that successful negotiation hinges on 3 things:
• leverage,
• abundance,
• and having options.

Recognizing bad faith, lack of trust, and deals that look good on paper but are detrimental in reality is crucial. Walking away can be a powerful strategic move that demonstrates your firm convictions and can often lead to a more favourable outcome or the fact that there are some deals you’re never going to get, it’s better to recognize them sooner.

When to walk away:
1. You’re Hesitant to Start Negotiations
If due diligence reveals that the company doesn't meet your business standards, it might not be worth starting negotiations. Trust your instincts; if you feel uneasy from the beginning, reconsider moving forward.

2. Poor Terms Aren’t Changing
Negotiations require compromise. If the other party refuses to budge on unfavourable terms, it's a clear sign that walking away is in your best interest. Persistently rigid positions can lead to wasted time.

3. Initial Terms Continue to Change
Deals naturally evolve, but constant changes to the initial terms can be a red flag.

4. Counterparties Keep You Waiting
While patience is necessary, prolonged delays can be a tactic to pressure you into conceding on key terms.

5. Agreeing to Terms Compromises Your Integrity
No deal is worth sacrificing your integrity. Walk away from any contract terms that require you to engage in unethical practices, put employees at risk, or accept clauses that could lead to significant contract value leakage.

6. You Can’t Meet Contract Obligations
Even favourable terms require realistic commitments. If fulfilling the contract will be impossible, it’s better to walk away. Agreeing to terms you can't uphold can lead to potential legal issues and consequently, losses.