Dealmaking: The New Strategy of Negotiauctions (Second Edition)

Competition for the deal must be deployed in a nuanced way—seemingly small process choices can have big substantive implications.

You should be more likely to auction as the number of serious potential buyers increases.

Thinking about where we wanted to end up, we started with a number that got us there as a midpoint.

experts might simply decline to participate in open-outcry auctions. If you want to deal with them, you will have to negotiate privately, or at least hold a sealed-bid auction.

“contingent contracts” in the negotiation lingo, have three major benefits:6 1. They align the incentives of the parties. In the Frasier negotiation, once a ratings-based incentive is built into the contract, Paramount has a strong financial incentive to produce shows that keep the ratings up, which is exactly what NBC wants too. 2. They allow the

Identifying value-creating opportunities requires probing for the underlying interests of each side, rather than playing the traditional game of positional bargaining.

Professor Howard Raiffa’s maximum bid of others (or MBOO, pronounced “maboo”) analysis, which captures the fundamental trade-off in graphical form.

The general lesson is to think through what will really happen if there is no deal—not just one step ahead (buy another show) but two or three steps ahead (potential bidding contest). Best-practice BATNA analysis requires constantly asking yourself, “And then what happens?” until you are satisfied that all parties involved have reached stable groun

Bidders are generally wary about participating in auctions. In some situations you will have to use a more closed, negotiation-like process to bring bidders to the table.