Chapter 12: The Authority of Your Counterpart

Ensure Your Counterpart has the Authority to Negotiate

Negotiation can only succeed between equals who both have the authority to agree on any of the decisions that will need to be reached. If either party - buyer or seller - does not have that authority, the negotiation cannot be concluded. It is important to understand what authority levels exist in your counterpart's company.

Part of the necessary questioning process is to establish the real authority of your counterpart and any team members he or she may introduce. As a general observation it should be obvious that both parties must have the authority and the determination to change the various components of an agreement. In other words, there is no value in getting to the bargaining phase only to find that your counterpart does not have the authority to agree on the tradeable variables.

The first question is, what title does my counterpart have? Does that title clearly establish their authority? Even if they are a senior partner or managing director you can check by asking the innocent question, 'Beside yourself, who else is involved in the decision-making process?'

Where our counterpart's title is less clear, we must check whether they have the authority that the negotiation requires. State, 'We are going to move to the final negotiation phase next Tuesday; can I take it that you have the authority to agree the final terms?', or better still, 'Who else in your organisation needs to be involved in agreeing the final terms?' If there is anyone else, make sure that they are there. One tactical tip here is to ask a question in a meeting, such as 'Will your company policy support this?', and then watch their eyes and observe who everyone looks at - that is nearly always the real decision-maker or the prime influencer.