Fundraising · Negotiation

Can you describe a BANTA, the crafting of, and negotiation experiences you had when using one?

D Worthington Founder at Loop Global

August 31st, 2015

Best Alternative to a Negotiated Agreement - what exactly is it, why have one, how to craft it, and any negotiation experiences with would be a tremendous help. I hear this is leverage, but how?

Thanks to all in advance!
As a founder, you’re always in fundraising mode (whether active or passive). In this course, we’ll teach you how to successfully raise follow-on capital, establish a valuation for your company, build an investor pipeline for your next round, and more...

Edward M. Yang

August 31st, 2015

Put simply, when you have alternatives available, you are less likely to accept a sub-optimal deal. This goes for business, as well as every day life such as buying a car, for instance.

Sher King Principal Innovation Designer at Bonde, Inc

August 31st, 2015

Hi D Worthington, It is a BATNA- Your Best Alternative To a Negotiated Agreement- & the key word is 'negotiated' -there should be something in it and worth it for all parties - if they do not take your shiny offer, what is the best fall back for you? EX: You want to rent your house for the summer, but you don't want pets inside. If your only offer has dogs, your BATNA is to not rent the house out.Negotiating isn't about leveraging per se but getting the best deal for your team. There are so many delicious styles and means to negotiating. Check out Harvard's Program on Negotiation(PON) Best to you,Sher

Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

August 31st, 2015

You have one, whether you know it or not. It is the best thing you can do if the other part walks away, and you don't have an agreement. But you can also identify your own walk away position -- at what point is not having an agreement better than the agreement on the table? When you know what your best alternative that you can do on your own without an agreement, you can't be tricked or shamed into giving up more than that. That's where your self knowledge becomes leverage. Its where you can say "you have to be better than this, or no deal".

Cameron Powell

August 31st, 2015

I took Roger Fisher's (and the Harvard Negotiation Project's) Negotiation class during a winter term at Harvard Law School years ago. It was among the most useful classes I took.

Wikipedia gets us off to a good start: "In negotiation theory, the Best Alternative to a Negotiated Agreement, or BATNA, isthe course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA."

In many, if not most, situations, the BATNA is a tool for negotiating leverage. You are saying, in effect, "If you don't take my offer of a negotiated agreement, then your best alternative is X" where X is made to look like a worse outcome for the other party than your proposed agreement. That usually means doing research to understand the law, among other things.

Example: Landlord failed to return all of Tenant's deposit in a timely manner.

Option 1: Tenant says, "Please, Landlord, I know you are saving up for that lobotomy, but send me the rest of my deposit." -- Effectiveness Score: 0 of 3

Option 2: Tenant says, "Give me the rest or I'll sue you." -- Effectiveness Score: 1 of 3 (BATNA is only implied, and not concretely)

Option 3: Tenant says, "I ask you to give me the rest of the deposit (or some % of it to reflect litigation) because if I have to bring a suit, you will be on the hook not only for triple the amount you are withholding but also for my attorneys' fees. You'll also waste a lot of your own time. And you'll have to admit, that's a pretty sucky BATNA for you."

The BATNA typically incorporates an analysis of the legal situation, costs, time, inconvenience, reputational harm, and more.

John Sweet Business Strategy, Technology and Innovation

August 31st, 2015

Whenever you go into a deal negotiation, your goal is to get a deal done. That means inventing a value proposition that makes both of you better off than if no deal were possible and you go your separate ways.

How do you know what options produce win-win outcomes? You look at all possible BATNAs, not just for your prospective partner, but also for yourself. Your job as a negotiator is to understand what these BATNAs might be -- and how, by combining the interests of both parties, you can produce an outcome that's better than any of the above. This can be easier said than done, but the bottom line is that you need to understand both yourself and your prospective partners, and arrive at your understanding as objectively as possible.

If you are negotiating on behalf of a larger organization, BATNAs can take on another essential purpose. You may need to "internally sell" a prospective deal. This can be challenge if you encounter a myopia common to many internal stakeholders who have no knowledge of real-world constraints. By communicating the parties' BATNAs, you can explain why a deal needs to take a certain shape -- as opposed to some alternative, fantasized, "ideal shape" that might be feasible if only the real world imposed no constraints to deal formation.

A final thought: I remember a wonderful quote from a Chuck Norris film in which the villain destroys a straw-man challenger -- and he seals the "kill" with the words: "Don't ask for what you can't take." To be sure, I'm no expert in the martial arts genre, but I've always loved this line. When you know your counterparty's BATNAs, you'll be able to ask for what you can take. And this is what gets deals done.