Negotiations for M&A's
... Similarly the BATNA needs to be realistic (and in place) so the acquiring company can walk away if irrevocable issues arise, e.g. financial disagreements, ethical considerations, etc. 2. The second stage, which might be considered that of formal negotiation, the acquiring company’s most critical requirement is good preparation. Comprehending their own interests and making intelligent assumptions of the other party’s interests are both crucial. This preparation can be divided into stages: a) developing one’s own set of assumptions about various parties’ interests, while remaining cognisant of the limitations underlying the assumptions used, and determining the information required to validate those assumptions; this in turn allows for a determination of each parties’ likely BATNA; b) ascertaining the interests of the individuals involved their own team in order to develop a comprehension of the in-house situation,, to increase the likelihood of the individuals “buying into” the process, to create a clearer sense of limits and objectives, and ultimately to create a mechanism for selling the agreed deal back to one’s constituencies; this has the added advantage of helping to determine who needs to be physically present during the negotiation process, as well as ironing out internal differences ahead of time. In the formal negotiation process, the potential acquirer must keep in touch with their constituencies, but must also be able to present himself or herself as a drop-dead decision-maker. They should use the negotiation process to garner information that will help to lead to wise decision making, a deal with which the parties are happy. After all, if a party feels bulldozed into an agreement, they are not likely to honour it but may be expected to “work to rule”. 3. Once agr...