Best Alternative to a Negotiated Agreement (BATNA)

What is a BATNA?

The Best Alternative to a Negotiated Agreement (BATNA) is the course of action a party will take if negotiations fail and no deal is reached. The concept, popularized by Roger Fisher and William Ury in Getting to Yes, helps negotiators decide whether to accept an offer or pursue alternatives.

Why BATNA matters

• A clear BATNA gives negotiating power: you can walk away from unfavorable offers.
• It prevents emotional or sunk-cost-driven decisions.
• BATNAs help establish a reservation value—the least favorable deal you are willing to accept.
• When both parties’ acceptable ranges overlap, a Zone of Possible Agreement (ZOPA) exists and a deal can be struck.

How to develop a BATNA

Follow these practical steps to prepare before negotiating:
1. List alternatives you could pursue if the current negotiation fails.
2. Evaluate each alternative for feasibility, costs, benefits and likelihood of success.
3. Select the alternative with the highest expected value—this becomes your BATNA.
4. From that BATNA, determine your reservation value: the threshold at which you will accept or reject an offer.

Preparing multiple alternatives strengthens your position and reduces the risk of being cornered into a poor agreement.

Practical strategies

• Research your options and the other party’s likely alternatives.
• Avoid revealing a weak BATNA; disclosing a strong, credible BATNA can increase leverage.
• Anticipate and neutralize manipulative tactics by remaining disciplined and fact-based.
• Use BATNA analysis to shift discussions from positions and demands to realistic options and trade-offs.

Pros and cons

Pros:
– Provides a clear fallback if negotiations fail
– Grounds choices in objective evaluation rather than emotion
– Increases confidence and leverage during bargaining

Cons:
– Identifying and validating alternatives can be time-consuming and costly
– Misjudging the value or feasibility of alternatives can lead to poor decisions
– Having a BATNA does not guarantee a better outcome if information is incomplete

Common pitfalls

• Sunk cost fallacy: continuing to negotiate because of time or effort already invested rather than because the deal is worthwhile. A robust BATNA helps counter this bias.
• Overconfidence or miscalculation about your alternatives or the other party’s options can lead to rejecting acceptable offers or accepting bad ones.

Example

Company A offers $20 million to acquire Company B. Company B believes it’s worth $30 million and rejects the offer. If Company B had listed and evaluated alternatives (e.g., remaining independent under tightening regulation, seeking other bidders), it might have adjusted its reservation value and decided whether the $20 million offer was reasonable given industry risks.

Key distinctions

• BATNA: the best course of action if negotiations fail (your fallback).
• Reservation value: the least favorable deal you are willing to accept in the negotiation; it is derived from and informed by your BATNA.

Bottom line

Deciding on and preparing a BATNA is essential negotiation planning. A well-researched BATNA clarifies your limits, strengthens your bargaining power, and helps you make rational choices about whether to accept an offer or walk away.

Further reading

• Roger Fisher and William Ury, Getting to Yes: Negotiating Agreement Without Giving In
• Harvard Law School, Program on Negotiation — resources on BATNA and bargaining techniques