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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Back up your offer with a strong rationale

PON Staff   •  09/30/2017   •  Filed in Dealmaking

Imagine that you are a café owner who is soliciting quotes for a redesign of your space. One of the interior designers you’ve been talking to is known for being affordable, if not innovative. But the designer’s initial estimate, $20,000, is well over your $16,000 budget for the project and, you believe, excessive. As you … Read More 

When First Offers Fail

PON Staff   •  07/31/2017   •  Filed in Dealmaking

In negotiation, the party who makes the first offer often gets the lion’s share of the value. That can be due to the anchoring effect, or the tendency for the first offer to “anchor” the bargaining that follows in its direction, even if the offer recipient thinks the offer is out of line.
Yet plenty of … Read More 

MESO Negotiation: Learn from a Seller’s Market

Katie Shonk   •  06/26/2017   •  Filed in Dealmaking

MESO Negotiation: Learn from a Seller's Market

What negotiating skills can negotiators take away from hyper competitive bargaining situations? With home sales heating up (again) in some parts of the United States, homebuyers are facing competition they haven’t seen since before the real-estate bubble burst back in 2008, and it’s showing up in the form of packed open houses, multiple bids above … Read More 

Integrative Negotiation Examples: MESOs and Expanding the Pie

PON Staff   •  05/18/2017   •  Filed in Dealmaking

Integrative Negotiation Examples: MESOs and Expanding the Pie

In our society, we’re bombarded with a multitude of decisions each day, beginning with the increasingly complex question of how to order our morning coffee. In his book The Paradox of Choice: Why More Is Less (Ecco, 2004), Swarthmore College psychology professor Barry Schwartz describes the contemporary phenomenon of becoming exhausted by “the tyranny of … Read More 

When Two Deals are Better than One

PON Staff   •  05/12/2017   •  Filed in Dealmaking

Barack and Michelle Obama

When you have multiple negotiations to conduct with one or more partners, should you combine them into one big deal? In negotiations for the sale of new books by Barack and Michelle Obama, the answer was an emphatic yes.
Cast of characters
When famous political figures have a book to sell, they turn to one person: Robert … Read More 

Negotiation Research You Can Use: When Women Negotiate More Ethically Than Men

PON Staff   •  05/12/2017   •  Filed in Dealmaking

Men and women approach negotiation differently, on average, research suggests. Women initiate negotiations on their own behalf less frequently than men, for example, though they are just as likely as men to advocate for others. In addition, women—and not men—tend to face a backlash for bargaining on their own behalf, an outcome that may explain … Read More 

Dear Negotiation Coach: Negotiating Upgrades

PON Staff   •  04/12/2017   •  Filed in Dealmaking

Q: My company, a large multinational, contracts with an outside vendor for some of our software infrastructure. Due to new regulatory requirements, we have asked the vendor’s team to upgrade certain features of the software. We think that we should get these upgrades for free because these enhanced features may be needed by their other clients … Read More 

Dealmaking: Don’t Wait for Them to Blink

PON Staff   •  04/06/2017   •  Filed in Dealmaking

dealmaking

In labor disputes and dealmaking, negotiators on both sides are likely to overestimate the odds that the other side will view their proposals as fair. In fact, however, self-serving perceptions of what constitutes a fair settlement can cause negotiators to remain miles apart. These factors appear to have come into play when the National Hockey … Read More 

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