Nothing is Non-Negotiable.

Negotiation does NOT mean sitting down with just one party and spending time going back and forth until the stronger party wins. Instead:

Negotiation means solving problems.  Your problems.

And to do so, you can collaborate with as many parties as you want - not just one.

Let me bring this to life with a real example, trying to show that even in impossible situations, there's always a way out.  

The Problem

With a failing business venture in your hands, you have creditors breathing down your neck.  You've taken a mortgage on your house to finance your business, you have now defaulted, and you're on the verge of losing the roof on top of your head.  Bankruptcy seems to be staring you in the eyes.

As a natural step, you decide to negotiate with the mortgage-lending bank.

Solution 1: The Bank

You visit the bank with a stressed face to talk about your distressed mortgage with your portfolio manager.  She makes an effort to emphatize... yet she has her own interests: foreclosing the house for a price at least enough to close your debts to the bank.

You start to bargain with the bank on the foreclosing procedure, the asking price, the timeline for payments.  Seeing that your bargaining position is weak, the bank would probably impose its conditions, and for many people, the negotiation would stop at this point.  They would freeze, thinking they have no choice but to agree with the bank.

But do you really have no choice?  

Solution 2: The Broker

Along with negotiating with the bank, a smart negotiator would get in touch with a professional broker to arrange the sale of the house.  Your and your broker's interests are more aligned: the more your house sells for, the more extra cash you'll have after closing your debts, and the more your broker's commission.

Getting to work, the broker presents the house under the best light, sets up just the right ads with the right asking price, targets just the right buyers, and within a week, you have three buyers knocking on your door (literally).

Solution 3: The Buyers

Three offers from three buyers, each with its own terms.  Say, one offer is for $1,000,000, all-cash; the second is a deferred purchase for $1,200,000, payable in equal installments over a year; the third is for $900,000 plus $200,000 worth in shares in an aggressively growing public company.

Which one do you choose?  It's up to you to evaluate each option against your interests: do you take less money now; more money later; or some money now and some in the form of a high-risk, high-reward investment?  Of course, you can also play one buyer against the other, to extract the "best and final" offers from each.

And with each step, you feel your negotiating power and prospects improving.

Solution 4: The Business

But wait a minute, what is with this obsession of yours with selling your house?  Is that really your only option?  Really?

Let's go back to where all your woes and worries started: your business.  It still holds value (unless you've sold all its assets for peanuts) and, with shrewd management and nerves of steel, maybe even prospects.  Consider what you can do with what you have left of your business:

1. You can sell 100% of the business along with its assets and liabilities, all-cash, and use the proceeds to pay off (part of) your mortgage debt;
2. You can inject cash by selling shares to a new investor, who may bring in much-needed skill, expertise, and connections to revitalize your business;
3. You can spin off a part and sell it as a standalone venture, along with proportionate assets and liabilities;
4. You can sell off prized assets -- special intellectual property, strategic know-how, databases -- for a high price, using the proceeds to satisfy debt and/or boost your business.

Notice how the landscape is changing.  By adding a new dimension -- your business -- you've added several new players to the mix, each entailing a separate line of negotiation and a new source of power.

Solution 5: The Business Creditors

You may be thinking that there's not much negotiating to do with your creditors (including your bank): your business debts are secured with corporate and personal assets which will soon go into liquidation.  But...

Think again: usually, the last thing creditors want to do is go through the frustrating process of foreclosure -- the bureaucracy, the paperwork, and the costs involved are nerve-wrecking and time-consuming.  And the taxes... oh, those taxes.

So, all the while you're searching for solutions, you should be negotiating better terms with your creditors and bank: refinanced payments, payment plans, write-offs, etc. Seeing you've been keeping yourself busy, you're also likely to obtain their positive stance toward you.

Solution 6: The Bankruptcy

If all else fails, you always have your fall-back position: bankruptcy.  Yes, it's not an appealing solution, but it's still a solution.  Draw up the worst-case scenario: you lose your business, your house, all your other assets, your credit score is redder than strawberries, and your face is even redder from embarrassment... but...

Will you be sleeping hungry on the streets?  Can the creditors come after the summer house your wife received as an inheritance from her late uncle?  Can they come after the jewelry she received as gifts.  Could you still use your son's car?  Do you have family and friends to fall back on for support?

Again, things aren't looking as bad as they might as first sight.  Moreover, even before you start taking the above actions, it would be wise to look into this fall-back scenario and try to improve it (for example, could you sell certain assets today for cash, so it's not foreclosed for cheap tomorrow?)

Solution: There Always Is One (or Six).

Negotiation is a problem-solving process.  However, many people lock themselves in with only one solution with only one other party: here, the bank and its foreclosure terms, which are non-negotiable.  But...

"Nothing is non-negotiable.  Nothing."

In your negotiation with the bank, you can find buyers for your house.  Not happy with one buyer?  Go to the next one.  Not happy with any of the buyers?  Think about boosting or selling your business.  This investor's terms don't work for you?  Spin off and sell it to another one.  Pick and choose from a laundry list of solutions - your bank will be all the more happy.

On the verge of a financial and psychological breakdown, you've turned singular negotiations with your creditors into one very large negotiation set-up with many players: buyers, businesspeople, maybe even new banks willing to refinance your debts.

So, in impossible situations, remember:

"There is always a solution."

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Stay tuned for more on negotiation by clicking the "Follow" button above.  For my previous LinkedIn Pulse columns on law, negotiation, and strategy, see this link.

Stepan Khzrtian is co-founder and Managing Partner of LegalLab Law Boutique (www.legallab.co) and co-founder of the Center for Excellence in Negotiation: Yerevan (www.cen.am). For nearly 10 years, he has been engaged in training and consulting on negotiation, working with clients to successfully close deals with Fortune 500 companies and empowering officials and officers to best serve constituencies. 

He writes on law, negotiation, and strategy.