6.6. Closing negotiations


Closing Signals
The closing of a negotiation represents the opportunity to capitalize on all of the work done in the earlier phases, and needs to be handled carefully. There are a number of signs that indicate that the opportunity for closing negotiations is approaching:

  • The difference in the position of the two parties narrows significantly.
  • The objections and counter arguments have begun to fade; this may well indicate that all of the major points of contention have been addressed satisfactorily.
  • The other side indicates that they would like to see a draft final agreement or contract. This indicates they are willing to spend time examining the fine detail of the proposed deal.
  • In complex negotiations it can sometimes be necessary to wait before making a final commitment. This allows both sides time to think, to digest the whole proposal and to decide whether they are genuinely happy with the terms set out. In some cases it may even be a good tactic for the seller to suggest a pause for reflection – especially where the deal is one round in a long term relationship.

    In large scale deals the pause required between agreeing in principle and formalizing the deal by exchanging contracts may be days, weeks, or even months. It is the buyer who decides when to sign and any external pressure brought to bear upon them may backfire – even jeopardizing an otherwise done deal.

    The research that you’ve done in the preparation phase, combined with all of the information that you’ve gained since should be used to guide you. You should be aware of the options available to the other side, the importance of the deal and the risks inherent in delaying – as well as those associated with putting pressure on the other side.

    Tactical Manoeuvres
    Negotiations continue right up until the deal is finalized – and in some cases they continue even beyond that! You should be aware that the other side may try to pull a last minute tactical manoeuvre. This is often a try-on based on the premise that you have invested a lot of time and energy in the negotiations and are more likely to accommodate such a request, rather than jeopardize the whole deal.

    Here is an example:

  • “Well, we’ve examined your latest draft proposal carefully and subject to the issues we’ve just agreed we will recommend acceptance . . . on one condition – that we’re only committed to the maintenance contract for one year and not three.”
  • Last minute requests such as this are often a re-iteration of a request made during the bargaining phase, in which case you should be prepared for it.
    The correct response to a last minute demand will depend on the importance of the deal, the positions reached whilst bargaining; the state of the competition and the nature of the request. You should be aware that if you re-open negotiations on any point raised at the last minute, that this may postpone or even remove the opportunity for closing. Don’t forget that the other side has also invested a lot of time and energy into the negotiations and may be as keen to do the deal as you are. Once negotiations have reached their closing phase even an initially weak position may be significantly stronger than it was.

    Stay Calm
    If the other side makes a sudden announcement or shows an abrupt change of tactics, once the closing phase has started, it is important to remain calm. There is nothing to be gained by reacting with alarm, dismay or incredulity. Maintain a professional attitude and ensure that you understand all of the details of the change in their position. Depending on how fundamental their proposed change is, you may find it advisable to seek an adjournment whilst you consider your response, or you could simply move the discussions onto areas that can be finalized. This latter course of action may re-introduce a spirit of co-operation that can help you later, when their change in position has to be addressed. You should be prepared for a last minute tactic, particularly if the other side has repeatedly raised an issue that remains unresolved. Practice your reactions to surprise information, develop a calm and professional exterior regardless of how shaken up you may be feeling.

    Timing Your Request
    The bargaining phase is effectively over, you have talked through virtually all possible permutations and options – at least it will probably feel that way. The points of contention have been addressed and you believe that you’re respective positions are probably about as close as they’ll get. Up until now it has been all talk. Decisions are harder – because making decisions is a thing that almost everyone finds difficult. Just before you ask for the other side’s commitment can be a good time for a short adjournment. Take a few minutes to gather your thoughts, if appropriate consult with your team in private. It is important to avoid any interruptions when delivering your closing statement, so brief your team not to interrupt or distract you and deliver it in a style that discourages interruption from the other side. Also, avoid the presence of any hitherto uninvited third parties – who may wish to revisit areas that have already been settled.

    Experienced negotiators will develop their own approach to actually asking for commitment from the other side and this approach should be adapted to each specific negotiation. You could conduct a high level review of the major points that have been agreed and that together indicate that an agreement is likely. At the same time ask questions that will illicit a positive response, as keeping the overall tone positive will favour a commitment to the deal that you are seeking. You could keep an ace up your sleeve – some ‘special terms’ or concession that you have not used up until now. This can be held back and used in the event of the other side hesitating at the point when you ask for their commitment. The use of this tactic requires foresight and planning – to ensure that you have something left to offer at the end of the bargaining phase. You could pick up on a point made by the other side and use it as the catalyst for closing. For example, ‘That was an excellent point I think that in the light of that we have the basis for agreement’ . You could emphasize how far your two positions have come together. For example, ‘I think we’ve made a lot of progress today, and I would like to table this draft agreement’.

    Signing the Deal
    Once the other side has responded to your closing statement and any questions have been answered – this is the best time to ask them for their commitment by producing the contract or agreement, and indicating to them where they should sign. Act naturally, you may feel like your heart has jumped into your throat but appear as cool, calm and professional as possible. Whilst the other side is signing, continue talking in a friendly and relaxed way, diverting attention away from any ceremonial importance of the occasion.

    You have now said and done everything that you set out to. Wait for the other side to speak – either to make the commitment that you seek, or to ask for clarification on one or more issues. At this time you should be in possession of all the facts to answer these to their satisfaction. Once you have the agreement signed you should obey the salesman’s golden rule – Once you’ve sold . . . shut up. Without appearing to be in a rush you should aim to leave the negotiating table as quickly as courtesy allows.

    Stay Professional
    When an agreement has been reached and the deal is signed, sealed and delivered there are a couple of important issues that still need to be addressed. You should try to manage both side’s feelings of success. It is not a good idea to openly celebrate your skill in securing a deal that was beyond your wildest dreams. It is far better to make the other side feel that they have come out of the negotiations with the best deal that they could have secured. This will help to create maximum stability in the new agreement – as it should prevent it from being undermined by doubts and recriminations. Furthermore, by disguising any private feelings of elation you will pave the way for an easier passage in any future negotiations with them.

    Whether your negotiations have been conducted by you individually or as part of a team it is a good idea to assess your performance. The overall success or failure of the process shouldn’t unbalance this analysis. Avoid singling out individual team members and rebuking them publicly for errors that they may have made. However a private discussion with them on how to avoid repeating such mistakes may prove worthwhile.

    The Value of the Relationship
    An important point to remember is that the negotiators will have developed a significant experience of dealing with the other party, that a relationship will have developed and that this may well represent a valuable communication path between the two organizations. Furthermore the in depth experience that the negotiators have developed – surrounding the written terms of the deal may also prove to be an important source of reference to their parent organizations.

    Negotiated agreements do occasionally fall apart and one of the best insurances against this happening is to keep the negotiators involved in the implementation phase of the deal. In practice, this may mean little more than making sure that they are on the circulation list for reports and other communications regarding the implementation. Even at this level they may be able to read subtle indications that things are not running smoothly and to initiate appropriate action, when others involved in the implementation may not.