Negotiation Strategy Series: 4 Exchanging concessions and making agreements

10 strategies for successfully closing negotiations.

Welcome to the final in a series of four articles on defining your negotiation strategy and enhancing your negotiation skills by Professor Javier Marcos.

In business negotiations, the ability to exchange concessions effectively and reach mutually beneficial agreements often separates skilled negotiators from average ones. Whether you're closing a major acquisition, finalising a partnership deal, or navigating a complex commercial arrangement, as a negotiator, you need to understand the strategies that increase the likelihood of reaching agreement, and the techniques that make the difference between capturing value for you and your organisation and “leaving money on the table”.

Here I outline ten powerful strategies that can transform how negotiators approach what typically are the final phases of negotiation processes: exchanging concessions and making agreements. These proven techniques allow you to create value whilst maintaining leverage.

1. Strategic concession sequencing

Concessions are not simply items to be given away. They are strategic tools that, when used effectively, can create momentum, build trust, and unlock value for both parties. The key lies in planning their sequence, timing, and magnitude to maximise leverage whilst moving towards agreement. The order and timing of your concessions matter enormously. Rather than making random concessions, successful negotiators plan a decreasing pattern, starting with larger concessions and gradually moving to smaller ones. This approach signals commitment whilst preserving value.

A recent study (Tey et al, 2021) showed how decreasing concessions causes recipients to make less ambitious counter-offers, and for them, to reach worse deals in distributive negotiations. The decreasing concessions create a disadvantage for the receiving party as a direct result of the recipients' expectations regarding subsequent offers, causing them to develop an exaggerated idea of the counterpart's reservation price compared to what happens with other concession strategies.

Tesla's acquisition of SolarCity in 2016 exemplifies this perfectly. Starting with an initial offer range of $20.50-$28.50 per share, Tesla strategically reduced their offer to $25-$27, then made a smaller concession to a fixed price of $25.37. This decreasing pattern maintained negotiation momentum whilst preserving most of Tesla's original position.

You can apply this technique by categorising potential concessions into high, medium, and low-value items before entering negotiations. Plan your sequence in advance, and for each concession made, explicitly request a specific reciprocal concession. Signal clearly when you're approaching your limits with the smallest concessions.

2. Value-based trading (logrolling)

This strategy focuses on exchanging items that have asymmetric value between parties – what's low-cost to you but high-value to them, and vice versa. The 2019 Pfizer-Mylan merger negotiations demonstrate this nicely. Mylan shareholders valued operational control highly but cared less about the company name and headquarters. Pfizer prioritised favourable tax treatment and revenue distribution, but was flexible on governance. Their agreement traded operational control for favourable financial terms, creating mutual gains.

In order to effectively implement logrolling, before negotiations, assess the relative value of each variable to both sides. Create a matrix categorising items as high/ low value for each party, then identify items with the greatest value differential. When making offers, package multiple items rather than negotiating them separately.

3. Strategic use of objective criteria

Anchoring negotiations to external standards, benchmarks, or precedents helps overcome deadlocks and justifies positions. During 2023 labour negotiations between the United Auto Workers and Ford, the breakthrough came when negotiators reframed discussions around industry standards, inflation rates, and productivity benchmarks. By establishing that comparable unionised automotive workers had received 25% increases over four years, they created an agreement framework both sides could accept as objectively fair.

Perceived procedural justice, and accepted criteria, will often facilitate business deals. Thus, it can be helpful to research relevant industry standards and precedents before negotiation. Introduce objective criteria early to establish shared reference points. When facing resistance, ask "What standard do you think would be appropriate here?".

4. Progressive disclosure approach

Rather than laying all cards on the table at once, progressive disclosure involves strategically revealing information, concerns, and proposals in a carefully managed sequence. Amazon's 2017 acquisition of Whole Foods began with limited disclosure around general interest and broad valuation ranges. As talks progressed, Amazon gradually revealed specific concerns about Whole Foods' operational challenges, whilst Whole Foods incrementally disclosed financial vulnerabilities. This allowed Amazon to refine its offer from $35-$42 per share to a final precise offer of $42.

As a negotiator, you are advised to begin with broader interests and general proposals rather than specific positions. You can then use each disclosure to assess the counterparty's reaction and reveal priorities gradually as trust develops.

5. The contingent agreement method

When parties disagree about future outcomes, contingent agreements allow them to "agree to disagree" whilst still reaching agreement today. In other words, contingent agreements enable disagreement to become the basis for agreement, rather than an obstacle.

Spotify's 2017 licensing agreement with Universal Music Group featured contingent agreements when the parties couldn't agree on royalty rates. They created a sliding scale: if Spotify reached specific subscriber milestones, royalty rates would adjust downward according to a pre-determined formula.

The practical application of this principle suggests identifying areas where disagreement stems from different predictions about the future, and then creating specific, measurable triggers for contingent terms and developing clear formulas showing how terms will adjust if triggers occur.

6. Bracketing

This precise approach narrows the zone of possible agreement through strategic anchoring. The negotiator proposes two offers – one favourable to themselves and one more favourable to the counterparty – suggesting the final agreement will fall between these "brackets."

During Microsoft's 2018 acquisition of GitHub, they employed bracketing, by proposing GitHub valuation could be as low as $6.5 billion or as high as $8 billion. The final acquisition price of $7.5 billion fell within but closer to GitHub's bracket end.

Bracketing should only be used after initial positions have been exchanged. Thus, as a negotiator, you should set your favourable bracket slightly beyond your target but within defensible limits, and then present both brackets simultaneously as a framework for finalising terms.

7. The calculated impasse

Unlike unplanned breakdowns, calculated impasses are strategically initiated temporary deadlocks that reset expectations and demonstrate resolve.

During the 2021 Netflix-Sony Pictures content licensing negotiations, Netflix deliberately created a calculated impasse by suspending talks for three weeks, citing "fundamental differences in valuation models." This pause allowed both teams to reassess priorities, leading to Sony's creative solution combining shorter exclusivity windows with performance-based bonuses.

You should signal impasses clearly but non-aggressively, defining specific issues causing deadlock. Suggest concrete timeframes for pauses, and when restarting, begin with areas of agreement before addressing deadlocked issues.

8. Package deal construction

Bundling multiple issues into comprehensive proposals rather than negotiating sequentially enables value-creating trades across different issues. The 2020 UK-EU Trade and Co-operation Agreement demonstrates sophisticated package construction. Rather than negotiating fishing rights, regulatory alignment, and services access separately, negotiators bundled these into comprehensive packages, trading greater UK regulatory autonomy and fishing rights for preferential EU market access and co-operation mechanisms.

In order to make the most of this technique, consider mapping all negotiation issues before making offers, categorising by priority. Construct packages including high, medium, and low-priority items for both sides. Present complete packages rather than individual positions.

9. Explicit process control technique

This tactic focuses on managing procedural elements like decision-making processes, communication protocols, agenda management, and timeline control.

Google's 2011 acquisition of Motorola Mobility compressed negotiations from months to six weeks by establishing a clear five-phase roadmap, formalised communication channels, requiring written agenda items 48 hours before sessions, and implementing structured decision validation.

Process control affects final agreements as much as substantive positions. Malhotra's (2007) research identifies process control as one of four critical pre-negotiation factors, with resolving process before substance, setting expectations, and controlling framing significantly impacting results.

So, consider beginning negotiations by proposing specific procedural frameworks. Create explicit agreements about information sharing and establish clear timeframes for key phases and decision points.

10. The closing window approach

Rather than artificial deadlines, this creates momentum through legitimate time constraints or diminishing opportunity costs. Disney's 2019 acquisition of 21^st Century Fox employed this by highlighting verifiable external constraints: upcoming regulatory filing deadlines, quantified integration costs rising $17 million monthly, and demonstrable competitor movements threatening asset value.

To make the closing window approach work, identify legitimate external factors creating genuine time constraints. Quantify costs of delay for both parties and frame constraints in terms of mutual interests rather than pressure tactics.

Conclusion

These ten strategies provide a comprehensive toolkit for managing the critical phases of concession exchange and agreement-making. Success lies not in applying them mechanically, but in understanding when and how to deploy them strategically.

The most effective negotiators combine multiple approaches, adapting their tactics based on the situation, relationship dynamics, and strategic objectives. By mastering these techniques, negotiators can move beyond simple position-based bargaining to create value, build stronger relationships, and achieve more satisfying outcomes for all parties involved.

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