Skip to content

Knowing When It's Time to Leave the Negotiating Table

You can't win every contract negotiation. While ideally you'd figure out a deal can't be reached early on, sometimes even promising negotiations can go south. It might hurt to throw all that work away and start anew, but it's important to always be vigilant for signs of a bad deal and to back out if necessary.

When It's Time to Walk

If you suspect a deal won't turn out well for you, analyze its pros and cons. Would sticking it through hurt your business to the extent that not entering into the contract in the first place would have left you in a better position?

There's a lot of tactics you can use during negotiations to reach a good deal, but a few key warning signs to watch out for include:

  • The counterparty requires some significant sacrifice, such as a non-compete clause, without providing an adequate benefit

  • The counterparty is pressing you to sign as soon as possible

  • The counterparty keeps changing the terms late in the game, without asking for your input

It may be that the contract seems good enough, but you'd still be better off walking away.  Roberto Orci, a major Hollywood producer, walked away from a deal to work on Transformers 3 simply because his time could be better spent on other projects, even though that film was practically guaranteed to earn billions at the box-office.

When thinking of walking, ask yourself if the negotiations are falling apart because of incompatibilities in business expectations and needs, or because of personality differences. It's easy to be blinded by emotion, but that should never jeopardize your business. Take a breath if necessary and reassess each other's position. If, from a purely logical perspective, it makes sense to carry on with the deal, then you should do so.

One simple method for keeping a deal from going south is to make sure the contract is presentable. Terms should be clearly laid out and broken into discrete sections so anyone reading it can easily follow along. An easy PDF compressor is a great tool for ensuring accessibility while sharing the file.

Past the Point of No Return

In case you're still tempted to accept a bad deal just to get something done, give some thought to the potential consequences. A bad deal can have lasting effects that could hurt you in all kinds of ways, many of which are unforeseeable.

For example, a bad deal might contain inadequate legal remedies or none at all, leaving you in a scary situation if the counterparty breaches the contract. A bad deal could also contain terms that turn out to be difficult for you to meet, putting additional financial strain on your company as you try to adapt to satisfy them. Failing to perform can hurt your reputation, cost you money in legal damages, and snowball with other effects to ruin your business.

Protect Your Future Business

Don't fall victim to the temptation of closing a deal just for the sake of closing it; take stock of whether you'll really benefit and what harm a bad deal could do to you down the line.

If you need help in evaluating a deal, try joining your local chamber of commerce.