Dealmaking

Dealmaking is defined as the art of crafting deals through negotiations focused on an integrative, or value-creating process, rather than through distributive bargaining, or a haggling process. Dealmaking includes the range of activities both at the bargaining table and away from it that seek to bring two or more parties together toward some common end, whether it is the sale of an asset, a vendor agreement, or a merger between corporations. The Program on Negotiation emphasizes integrative bargaining in its dealmaking literature and teaches methods and techniques from this school of thought in its executive education courses.

In corporate dealmaking, much of the action happens away from the negotiating table. Successful dealmakers understand that deal set-up and design greatly influence negotiation outcomes and successfully closing a deal. Other critical factors in successfully making deals include strategic behavior—the unwillingness of one or both sides to make a best offer—psychological factors, lack of a deadline, poorly-prepared formal documents, and refusal to allow the other side to make a graceful exit, even when they’ve agreed to your demands.

Strategies for successful dealmaking include tactics such as creating more value by exploring hidden interests and adding issues that appeal to your bargaining opponent. Another tactic is recruiting a third-party mediator when the dealmaking process is at an impasse. Sometimes, Harvard experts find, it pays to be the first person to make an offer, while at other times, it pays to wait.

Articles from the Program on Negotiation focus on a vast array of dealmaking strategies and explore the latest concepts such as expanding the pie, “negotiauctions,” anchors in negotiation, and bartering.

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Top Ten Business Deals of 2013: The “Burgers and Ketchup” Acquisition

PON Staff   •  01/14/2014   •  Filed in Dealmaking

On February 14, 2013, the news broke that Berkshire Hathaway, the conglomerate run by Warren Buffett, was planning to purchase H.J. Heinz—and its iconic Heinz ketchup—for $23 billion. Joining Berkshire Hathaway in the acquisition was 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in Burger King. As such, the deal marked … Learn More About This Program

Top Ten Business Deals of 2013: William Morris and IMG

PON Staff   •  01/14/2014   •  Filed in Dealmaking

In early December, super-agent Ari Emanuel’s William Morris Endeavor talent agency and private equity backer Silver Lake won a bidding war for the sports and media talent agency IMG Worldwide in a $2.3 billion deal.
Emanuel, whose notoriously ruthless negotiating and management style was parodied in Jeremy Piven’s Ari Gold character in the TV show Entourage, … Learn More About This Program

Dealmaking: Why It’s Tempting to Trust Your Gut

Max Bazerman   •  12/05/2013   •  Filed in Dealmaking

In his best-selling novel Blink, Malcolm Gladwell scans the psychological literature and uncovers fascinating nuggets of knowledge.

He describes people who can assess the integrity of a work of art within seconds, predict the likelihood that a couple will get divorced based on a short conversation, and assess their romantic interest in another on a “speed … Read Dealmaking: Why It’s Tempting to Trust Your Gut

What If We Have the Same Social Motive at the Bargaining Table?

PON Staff   •  10/21/2013   •  Filed in Dealmaking

When two people share the same motive, they fall prey to the same flaws and reinforce each other’s failings. Consider a labor negotiation in which the chief management negotiator withholds information about revenue projections, while the labor leader holds back details about workforce sentiment. Impasse is the predictable result. When you’re negotiating with a fellow … Learn More About This Program

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