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.

Negotiation in the news: “Victim” of Banksy’s prank laughs all the way to the bank

PON Staff   •  12/31/2018   •  Filed in Dealmaking

They say negotiation is an art, and that certainly was the case on October 5, 2018, when the mysterious artist known as Banksy turned a Sotheby’s auction into a clever—and very expensive—piece of performance art.
Drawing a crowd
An anonymous and highly celebrated street artist, British-based Banksy is known for his subversive graffiti and cheeky pranks, such as … Read More 

Negotiation in the news: When forging new partnerships, get the fit right from the start

PON Staff   •  08/30/2018   •  Filed in Dealmaking

Organizations planning a merger need to come up with a concrete plan for ensuring they’ll mesh rather than clash. Facebook’s leaders and WhatsApp’s founders appeared to skip that vital step when negotiating the social media giant’s purchase of the text-messaging app in 2014—an oversight that led to mounting frustrations on both sides and, ultimately, a decisive … Read More 

Negotiation in the News: How Congress got to “yes” on new banking rules

PON Staff   •  07/31/2018   •  Filed in Dealmaking

It’s hardly news that in the U.S. Congress, bipartisan dealmaking has been virtually nonexistent for years. That’s why it was newsworthy when Democrats and Republicans came together to negotiate changes to the Dodd-Frank law, which tightened regulations on banks and other firms following the 2008 financial crisis.
Accounting for the opposition
After President Donald Trump took office, … Read More 

How to Write a Contract that Lasts

Katie Shonk   •  07/23/2018   •  Filed in Dealmaking

Joint ventures, strategic alliances, purchasing agreements, and other types of partnerships between organizations often begin with a great deal of promise—and a hefty amount of risk. Serious misunderstandings and opportunistic behavior are relatively common in such relationships. Formal contracts offer a method for reducing such risk, but negotiators and their attorneys are often unsure about … Read More 

Negotiation research you can use: Promoting cooperation between teams

PON Staff   •  06/30/2018   •  Filed in Dealmaking

When a team negotiates on behalf of an organization, it can often achieve more than an individual would thanks to the team’s cumulative knowledge and experience. Yet team negotiations can create new problems. Groupthink—the tendency to go along with the dominant point of view rather than challenging it—can promote simplistic decision making in teams. And … Read More 

Deal Design: Strategies for Complex Dealmaking

Katie Shonk   •  06/18/2018   •  Filed in Dealmaking

As experienced negotiators well know, the more parties involved in a negotiation, the more difficult it often is to come to agreement, due in part to the logistical challenge of making sure each voice is heard. Yet multiparty negotiation offers considerable benefits. Most notably more opportunities for making tradeoffs and creating value in negotiation than … Read More 

Deal Design Guidelines: Set Yourself Up for a Better Deal

PON Staff   •  03/26/2018   •  Filed in Dealmaking

Without realizing it, we leave many of our most important decisions in negotiation up to chance. When talking to a potential negotiating partner, we may assume that we have met the best person possible to do this particular deal. We make tacit assumptions about whether we’ll negotiate in person, what we’ll discuss, how long the … Read More 

Create value by collaborating with competitors

PON Staff   •  12/31/2017   •  Filed in Dealmaking

In the business world, organizations take competition for granted. Companies and their employees work so hard to outperform and outsell their direct competitors that they often overlook opportunities to meet their goals by working with one another. But recent high-profile negotiations highlight ways in which competitors might be able to benefit from innovative partnerships that allow … Read More