BUSINESS DIVORCES: The Importance of BATNA

The first installment of this “Business Divorces” blog series —“BUSINESS DIVORCES: Introduction” — can be found here:  http://roblawfirm.com/business-divorces-introduction/.  This installment discusses one critical component in negotiating a business divorce: a party’s BATNA.

"BATNA" Defined and Why Knowing It ASAP is Critical

“BATNA” stands for “Best Alternative to a Negotiated Agreement.”

The acronym “BATNA” was coined by Professor Roger Fisher of Harvard Law School a few decades ago.  I was one of the students in Roger’s 1981 “Negotiation Workshop” course.  At the time, Roger was composing his seminal book on negotiation, Getting to Yes — Negotiating Without Giving In.  In teaching the class, Roger tried out various versions of his working drafts for the book on us.  Our class, plus the prior year’s workshop, received acknowledgment in the first edition of his book for “the benefit of [our] criticism” of those drafts — evidence more of Roger’s generosity than the value of our assistance.

Now in its Third Edition, “Getting to Yes” does not discuss the subject of BATNA until the second half of the book.  However, any party in a business divorce negotiation  — and that party’s attorney — should begin analyzing and crafting his BATNA before negotiations start.

BATNA is Much More than the "Bottom Line"

BATNA does NOT mean a party’s “bottom line.”  BATNA WILL lead a party to discover its bottom line but a party who understands his own BATNA will find much more and will protect himself from accepting a negotiated settlement better rejected.

A party and his lawyer who grasp the BATNA for their side before negotiations begin, and who regularly review and adjust their BATNA as negotiation proceeds, will have a confident sense of all alternatives available to them.  With that analysis in hand, they can weigh the net benefits and risks of each option against the others.

Benefits of Using BATNA Throughout the Divorce Process

Using this tool early and regularly, a party and her attorney can, among other things:

    • evaluate how a negotiated resolution of the divorce may compare with either resolving the divorce by other means or by doing all they can to avoid the divorce  (or delaying it until a better time);
    • distinguish their essential requirements for a negotiated settlement (the terms for which they lack a good alternative) from those benefits they can acquire outside of a negotiated agreement;
    • identify available alternatives and, even while engaged in negotiating a settlement, work to improve those other potential choices;
    • imagine alternatives not currently available but which they can develop as viable alternatives.

Using the BATNA method to critique, evaluate and understand your alternatives may sound like plain common sense.

Amid the emotion and momentum of a business divorce negotiation, common sense often loses its way.

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