Nogotiation Blog

Insights on Business and Sales Negotiation

Join us for insights on how to negotiate a winning balance, where where both sides understand and appreciate the value they receive. As a result, you are more likely to forge a long-lasting relationship that yields more and better opportunities in the future. This idea underpins K&R Negotiations’ Win Wisely™ approach and underlines the importance of using leverage wisely.

LogicaCMG and Dovetail

A recent agreement between these two companies yields a simple of example of the different values often seen by the two “sides” in a negotiation. LogicaCMG is a European IT and business services company.  Dovetail is a provider of payments systems.  They recently announced that LogicaCMG has acquired a “master license” to Dovetail’s payment systems technology.  The details are not important to us, except that they provide a window on motivations, and how the motivations of two sides to a negotiation are almost always different. At the core, most sellers get their business value from money.  Most buyers are using the purchased technology or service to solve a business problem, which in turn leads to value.  The accomplishment that the technology enables provides the value…

Amazon & the Service Level Agreement

There is a fundamental principle you should remember when negotiating. Ask yourself, "What problem am I trying to solve?" before you settle on terms and/or prices. Recently, Amazon experienced outages in their Amazon Simple Storage Service (S3), which provides scalable storage and retrieval to Amazon marketplace vendors.  The Service Level Agreement (SLA) says that Amazon "will use commercially reasonable efforts to make Amazon S3 available with a Monthly Uptime Percentage (defined below) of at least 99.9% during any monthly billing cycle (the "Service Commitment").  In the event Amazon S3 does not meet the Service Commitment, you will be eligible to receive a Service Credit as described below"...  Great.  The SLA was not met this month. Now what? Or in this case, What problem are we trying…

Where are we meeting?

Your place or mine?  When setting a negotiation meeting do you do it at your location, your "adversary's" location, or a "neutral corner"?  Not long ago, in the news, we read, "The aircraft maker Airbus [was] among half a dozen companies to sign roughly $30 billion in contracts… with Chinese partners."  It happened in Beijing.  Well, if you were getting your share of $30 billion, wouldn't you be willing to travel?  Yes, you would. Taking a broader view, as professional negotiators we are mostly insensitive to location (ours or theirs), with a few exceptions.  If you've done your homework and are well-prepared, there should be no "home field advantage" in terms of your negotiation results.  However, if: the right resource for one side or the other can only be in one place,…

BEA and Oracle (Part 3)

When last we looked, BEA had asked for $21/share, Oracle had offered $17, and key shareholder Carl Icahn was threatening the BEA board with a lawsuit to force action on the offer.  Now everyone is in agreement at $19.375.  What happened?  It's negotiation leverage and the Negotiation Success Range™ (NSR™) in action. Disclaimer: we know nothing from the inside. We just read the news, and view it with an expert negotiator's perspective. First, some background: BEA needed to restate earnings for 3 fiscal years as a result of an "options problem" and their stock mostly lingered below $15 for five years.  Oracle made an offer to buy BEA for $17/share.  BEA countered with $21.  Icahn said the company should be auctioned and he would take the decision to the shareholders, with or without…

Learning from the Stock Market

On the CBOE, the VIX® Index is sometimes said to be a "fear index".  It uses a blend of buy and sell options for the S&P 500 index to measure volatility and predict stock movement.  At K&R, we find that fear plays just as importantly in negotiations, and leads to certain predictability in transactions. Often in the Information Technology space, buyers operate under a common fear, "Did I get a good deal?  Should I have held out for more?"  Strangely, an offer of an additional discount to these buyers only emphasizes their fear.  It undercuts any confidence they had that the price was right.  This can have exactly the opposite effect of the intent of the discount.  Instead of motivating the buyer to close, it makes them worry that there is more to get - an even better deal tomorrow. …

Cerebrus Capital Management & United Rentals Inc.

What do you do if you think you agreed to pay too much?  Let's turn to the financial pages for an example.  But before we begin - we don't have any inside knowledge about this deal, and we don't know which side is telling the truth.  It just makes for an enlightening negotiation topic. In many recent financial articles, it has been reported that Cerebrus Capital Management wants to either renegotiate the terms (including price), or back out of their agreement to buy out United Rentals Inc. (URI).  Cerebrus was willing to pay a $100 million "breakup fee" specified in the agreement.  Good money, but the buyout price was $4 billion.  What happened?  URI is suing Cerebrus for specific performance on the contract (which essentially means forcing them to do what they contracted to do). In…

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Creating Value-Based Leverage

In this short video, learn why negotiation is really the art of finding agreement.

Mladen Kresic introduces the concept of value-based negotiations leverage and why it is a powerful tool for moving conversations to an agreement.

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