Dealmaking: The New Strategy of Negotiauctions (Second Edition)

Auction theorists call these kinds of auctions all-pay auctions, because all bidders must pay something, regardless of whether they win the prize. All-pay auctions are bad for bidders and great for sellers.

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ZOPA, which stands for “zone of possible agreement.” Given your assessment of your own BATNA and your own reservation value, and (equally importantly) the other side’s BATNA and reservation value, you can determine, at least as a first pass, whether a ZOPA exists. The ZOPA analysis tells you whether there is value to be created in the negotiation.

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

in the event that someone else (read: Samsung) bid for AuthenTec, Apple could pay $138 million (= 38 percent of the total acquisition price) to acquire a nonexclusive license to certain fingerprint recognition technologies. So, if Apple acquired AuthenTec, Apple could keep the fingerprint technology out of Samsung’s hands; but if Samsung acquired A

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

MBOO analysis revealed that the sales reps were systematically destroying value by bidding too low, which increased their chance of winning the business but reduced the profits to the company

Most financially significant negotiations occur between organizations, not individuals—yet individuals, not organizations, negotiate deals. It’s therefore crucial to consider the incentives of the individual across the table: How is she compensated? How long has she worked for the company? What are her long-term aspirations? These questions are ess

To sum up, if you are buying or selling a commodity, by all means use an auction. Or if your asset is not a commodity but you can construct a scoring system that accurately captures your preferences, a multi-attribute auction can work well. But if neither of these conditions is met, you should be more inclined to negotiate privately with one or mor