Notes

When you're getting ready to meet with more than one party, the usual steps of two-party negotiation apply. First, you must determine what Roger Fisher and William Ury, in their classic text Getting to Yes, call your BATNA—your "best alternative to a negotiated agreement."

Assessing your BATNA means forecasting what you are likely to end up with if an upcoming negotiation falls apart. For someone who has filed a lawsuit against her employer, this means estimating her chances of winning in court in order to figure out what she will and won't accept as a settlement. Specifically, the claimant can determine her BATNA by multiplying her chances of winning the case by the amount she's likely to get if she wins (based on how much past litigants in similar situations were awarded), minus legal costs. Suppose she figures out that she has a 50 percent chance of winning $100,000, minus $25,000 in projected legal costs—a BATNA of $25,000. If her employer offers a last-minute $50,000 settlement, she might decide to snap it up, since this amount doubles her BATNA.

It's important to analyze other parties' BATNAs as well. Assessing someone's BATNA means putting yourself in his shoes: gathering necessary information and making the same estimates you made for yourself. When you've figured out someone's BATNA, you've identified the bare minimum you need to offer to convince him to say yes. If he has no reasonable chance of getting more than what you offer, he should logically accept what you are prepared to commit.

Here's where negotiations with more than one party get tricky. When you just have one partner, you typically only need to calculate your BATNA and the other side's once. As the number of parties increases, BATNA calculations and resulting considerations of possible settlements take on a kaleidoscopic quality. In a multiparty negotiation, you must recalculate your BATNA every time you imagine a new coalition that might strand you on the outside of an agreement.

Imagine a merger being negotiated by the chief executive officers of three competing companies. None of the CEOs is dissatisfied with the status quo. If two of them decide to merge, their combined resources and market share will swamp the one left out. As a result, each CEO has to compare the status quo with a variety of two-way and three-way merger deals—some of which would leave one of them out in the cold. This need to compare fluctuating proposals makes preparation in multiparty negotiation all the more important—not to mention quite a bit more difficult—than preparation for a two-party negotiation.