There’s been a lot of brinksmanship in the news recently. While the rest of us worry about the potential fallout from the government shut down, those involved in the deadlock are thinking about brinksmanship. The closer we all come to oblivion, the stronger both parties feels about their hand. Rather than negotiating, they’re waiting for the other side to blink.
Let ‘Em Sweat
Many owners approach negotiations over the sale of an insurance agency in the same way. They build up their position as much as they possibly can, either the money they are willing to pay if they are buying an agency or the value they will receive if they are selling their agency. They take a step back to draw the other party in. They create tension by suggesting an interest in a different deal or suggesting that they don’t have to sell. They use these strategies to force a deal.
It’s a dangerous and destructive tactic that we have never liked. Like the government shut down, there are no winners in brinksmanship, just levels of loser. Brinksmanship can force the hand of a negotiating partner, but more often than not it creates indecision and complicates the whole process. Does that sound familiar?
Deadlocks Hurt Everybody
The trouble with brinksmanship is that, as long as you have the will to do so, it’s easy to resist. Once the aggressor puts up a wall, you do the same. It’s the classic double-bluff and it helps no one. Instead, the process drags on. Both buyer and seller get caught up for months and the final value of the deal, both financially and figuratively, is impacted.
Whenever you enter any negotiation process, you should start out looking for solutions rather than looking for leverage. By seeking mutually beneficial solutions you will get through complex issues quicker, avoid collateral damage and reach an agreement that everybody is happy with. Leverage can only enforce one solution or create a deadlock.
As I write this, the shut down is still in place but the news tells me there are signs that a compromise may be reached. That is how almost every attempt at brinksmanship ends, in compromise. In most cases, brinksmanship tactics are a damaging waste of time.
The real truth in high-level negotiations is that there is rarely a single winner. No agreement on selling an asset or defining a budget will ever favor one party entirely. However, if both parties realize that their function in a negotiation is to agree, everybody wins.
