5 NEGOTIATION TIPS FOR MINING COMPANIES: #2 DON’T BID AGAINST YOURSELF!
- By Pilot Law LLP
One of the fundamental mistakes made in negotiation is “bidding against yourself”. That is, putting an offer on the table, and then improving it, without receiving a counter-proposal from the other side. This mistake is particularly prevalent where there is an imbalance of power in the negotiation. For example, where a junior mining company is across the negotiating table from a major producer.
Bidding against yourself has the effect of:
- Showing undue eagerness to make a deal (junior mining companies can be especially susceptible to this);
- Encouraging your opponent to step back and let you continue bidding;
- Demonstrating poor negotiation technique.
Conversely, if you are faced with a counter-party who is improving on their offer before you make a counter-proposal, why would you stop that process? You can just say “not good enough” until the process runs its course.
When there are multiple issues on the table, it may not always be apparent that you are bidding against yourself. Avoid giving a concession on one point, without receiving a concession from the other side on another issue. That would have the same effect as bidding against yourself.
Buying a used car is a classic example where the process is designed to make you bid against yourself. The salesperson says – I’ll take your offer to my manager and try really hard to get it accepted. He or she then comes back and says – we’ll need just a bit more, and it may get the deal done. And so on. Once you make an offer you should not improve on it until you get a counter-proposal. And you may have to be prepared to walk away to achieve that. But that will inevitably be preferable to bidding against yourself.
Don’t bid against yourself is the second of five negotiation tips for mining companies (click here to check the first one) that I will be sharing with you.
Pilot Law LLP
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