Wednesday, January 28, 2009
Saturday, January 17, 2009
Tuesday, January 06, 2009
On many occasions in Business or life one might encounter a deal where the counterparty is very unreasonable. Entire deal might be unfair and the whole transaction is filled with mistrust. How does one then consider the offer or negotiate a deal?
Well! I took a course last quarter called ‘Bargaining and Negotiations’ where we were paired up every class and had to negotiate a deal. Most counterparts were very reasonable but some were aggressive. On some occasions the transaction was setup as easy deals with overlap in interests, in others the parties were far apart. In almost all occasions we had opportunities to create value and win-win scenarios for both parties.
I will not go into further details of the course but mention that one of the takeaways was thinking about “BATFA” - Best Alternative To Negotiated Agreement. In most cases, especially complex ones, BAFTA is not clear. However, in many cases we choose to walk away from a deal without having thought about alternatives. We get emotional and angry at perceived unfairness and decide based on our impression of our counterparty. It’s good to be passionate and emotional about your stand and fight hard for fair deal but equally important for it not to cloud judgment.
Below are four images that show a deal in the making which parties walked away from. We all know the consequences quite clearly both parties are worse off now.