Mergers and acquisitions (M&A) often fail to live up to expectations. Irrational optimism and insufficient planning can lead to bidding wars, overpayment, and agreements that fizzle out or even implode over time. As seen recently, Paramount’s negotiation campaign to acquire Warner Bros. culminated in a deal that faces significant obstacles to long-term success.
By comparison, a successful M&A negotiation strategy by almost any measure played out in Disney’s 2012 acquisition of Lucasfilm from Star Wars creator George Lucas. In the 14 years since the deal was inked, Disney has earned an estimated $12 billion—about three times the $4.05 billion purchase price—from Star Wars content, including a slew of blockbuster films, hit TV shows like The Mandalorian, merchandise, and licensing.
This impressive track record is rooted in the 2012 M&A negotiation strategy of Disney CEO Robert A. Iger and Lucas. As described by Devin Leonard of Bloomberg Businessweek, Iger and Lucas engaged in methodical business negotiations built on strong reputations, mutual understanding, and thorough research. The story is detailed in a Negotiation Journal article by Yicheng Ru, “The Force of Negotiation: A Comprehensive Study of the Disney-Lucasfilm Acquisition.”
In particular, business negotiators in many realms can learn from these four M&A negotiation tactics:
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1. Adhere to Your Long-Term Vision
As CEO of Disney from 2005–2020, Iger focused on closing deals that gave Disney a fresh influx of character-driven franchises. Disney’s acquisitions of Pixar Animation Studios and Marvel Entertainment both proved highly profitable right out of the gate.
For his next coup, Iger set his sights on the Star Wars universe—the biggest prize yet. In May 2011, at the launch of an upgraded Star Wars ride at Disney World, Iger asked Lucas, then 67, if he would ever consider selling his company. Lucas said he wasn’t yet ready but would “love to talk” about a sale eventually. Iger was ecstatic. About a year later, Lucas called Iger and told him he was ready to discuss a possible sale.
Negotiators often fail to see the connections among various dealmaking opportunities. As a consequence, individual deals fail to add up to a coherent strategy. Iger’s M&A negotiation strategy points to the value of only doing deals that match your long-term vision.
2. Build a Respected Reputation
Rather than pursuing multiple suitors and trying to drive up a bidding war, Lucas negotiated exclusively with Disney. One likely reason was the fact that he had known and respected Iger for years.
In the early 1990s, when Iger was president of ABC, Lucas pitched him a TV series based on Raiders of the Lost Ark called The Young Indiana Jones Chronicles. Iger had reservations about the show but gave it the green light because of his respect for Lucas. Though the show struggled creatively and financially, Iger kept it on the air for two seasons.
Years later, Lucas remembered Iger as a negotiator he could trust. As this story shows, admirable behavior in our business negotiations may bear fruit years and even decades later.
3. Identify Nonmonetary Concerns
Over a long career spent negotiating with “creatives,” Iger had come to understand the high value that visionaries place on artistic integrity. During Disney’s negotiations to purchase Pixar, according to Iger, he and Apple CEO Steve Jobs (then Pixar’s chief) “spent more time negotiating the social issues than we did the economic issues.” For example, Jobs successfully lobbied Iger to keep Pixar’s creative team in place at Pixar’s northern California headquarters, with minimal interference from Disney in Los Angeles.
Similarly, when Disney acquired Marvel, Iger saw the wisdom in keeping the company’s leadership team in place. These past examples were likely reassuring to Lucas. “I’ve never been much of a money guy,” he told Leonard. Far more important to him was ensuring that the fictional world he created continued to thrive.
4. Avoid Mixed Messages
As part of his agreement with Disney, Lucas turned in script treatments for the next Star Wars trilogy. J.J. Abrams and Michael Arndt were hired to write the script for the first film. After the deal closed, during a meeting with Iger and the scriptwriters, Lucas learned that they would not be using his story.
Lucas felt “betrayed,” Iger recounted in his 2019 memoir. “George knew we weren’t contractually bound to anything, but he thought that our buying the story treatments was a tacit promise that we’d follow them, and he was disappointed that his story was being discarded.” Iger regretted surprising Lucas with the news and blamed himself for getting their partnership “off to an unnecessarily rocky start.”
Lucas reportedly called that first film, The Force Awakens, “nothing new.” However, the parties went on to repair their relationship—perhaps in part because, when writing the final film of the trilogy, The Rise of Skywalker, Abrams solicited Lucas’s input.
Iger retired from Disney in 2020 but returned as its CEO in 2022 to help steer the company through a rough patch. When Iger faced a proxy fight with Disney investors in 2024, Lucas, one of Disney’s largest individual shareholders, showed his public support. “I have full faith and confidence in the power of Disney and Bob’s track record of driving long-term value,” he said in a statement.
What other lessons have you absorbed from Lucas and Iger’s M&A negotiation strategy?
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Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
The Disney – Lucas negotiation showed me that you should plan to be patient, have or build a strong relationship and one based on trust and respect if you want to reach an agreement that is positive for both parties.
Just a correction, the acquisition took place on Oct. 30 2012 not 2013.
Thanks!
Ultimately though the “treatments” provided by Lucas were ignored and completely new stories were developed which has left Lucas angry as shown in numerous recent news articles. So did Iger just ask for the treatments to make Lucas “think” they wanted his inputs, knowing full well Disney was going to do whatever it pleased?
I think that it is important to remember exactly *why* Lucasfilm awarded Disney the Star Wars franchise in the first place. I don’t think that it is important for the original treatments to be absolutely obeyed by Disney following the transmission of the deal. I think what the article is attempting to demonstrate is that Robert A. Iger really took his time and accomplished an amazing administrative acquisition for Disney with the deal with Lucas. The three tactics he used – attraction, patience, & inclusion – gave both companies a way to adapt to the forthcoming changes after the deal was traded. I don’t think that the treatments really mattered as much as the deal itself. I can’t wait to see what Disney does with the new franchise!