Imagine that a professor shows a jar full of coins to his class and announces he’s auctioning it off. Students are told they can write down a bid and that the highest bidder will win the contents in exchange for the money he or she bid. After everyone has written down their bids, the professor … Read More
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.
What are Negotiauctions?
Negotiauctions combine the competitive bidding of an auction with the one-on-one dealmaking of a negotiation.
Many (if not most) complex deals between buyers and sellers—from home sales to purchasing auctions to corporate mergers—qualify as negotiauctions.
Negotiauctions give sellers the opportunity to avoid making the difficult tradeoffs of traditional negotiations or auctions— competition versus value creation, for example, or many versus few bidders. In fact, sellers can take the best of both worlds— negotiations and auctions—to ensure they get a great deal.
Negotiauctions have the following features:
1. One-on-one negotiations. At some stage of negotiauctions, the seller engages one or more buyers in private discussions about the asset on the table.
2. One or more rounds of bidding. The seller also pits potential buyers against one another in an auction.
3. Several, but not too many, potential buyers.
Negotiauctions need enough parties to spark an auction but not so many that one-on-one negotiation would be difficult for the seller to manage.
4. Process ambiguity. In a traditional auction, the seller determines the process (whether there will be a single round of bidding or multiple rounds, for instance), and buyers are passive participants. In negotiauctions, by contrast, the process is up for grabs.
Buyers can try to shape the process to their advantage, as in the case of an auction contestant who approaches a seller about negotiating privately to move beyond the single issue of price.
In general, whether you are the process setter or a bidder in an auction that has features of a negotiation, don’t assume that the rules are set in stone. Instead, change the game by thinking about how you can influence the rules, parties, and assets to your advantage.
To improve your skills at managing even the most complex negotiations, download this free special report, Managing Multiparty Negotiations, from Harvard Law School.
The following items are tagged negotiauctions:
Secrets of Successful Dealmaking
Course Dates: This course is closed 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. In this program, you will examine the legal, tactical, and structural elements of dealmaking and acquire practical skills and techniques for navigating difficult tactics and … Read Secrets of Successful Dealmaking
Managing Multiparty Negotiations
If you’re in a negotiation with many parties who have varying positions, it may be tempting to join a coalition with parties who share at least some of your goals. But should you join one? … Read Managing Multiparty Negotiations
In Negotiauctions, Try a Game-Changing Move
Often in business negotiations, we must compete not only with a counterpart across the table but also with others fighting for the same deal. A procurement officer may announce to a longtime supplier that she is putting their contract up for an auction. Or bidders for a company might be invited to negotiate elements of … Read In Negotiauctions, Try a Game-Changing Move
Dealmaking: Secrets of Successful Dealmaking in Business Negotiations
Discover how to boost your power at the bargaining table in this free special report, Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from Harvard Law School. … Read More
Best Negotiation Books: A Negotiation Reading List
Whether you are facing negotiations with Congress, colleagues, customers, or family members, the following negotiation books, published in recent years by experts from the Program on Negotiation, offer new perspectives on common negotiating dilemmas. … Read More
How To Avoid a Business Contract Bidding War
Back in 2014, Nike was the undisputed king of superstar endorsements, dominating the field by paying top talent millions for the right to sell lines of collectible shoes in their names. But sportswear and footwear supplier Under Armour made a bold play to change the landscape. Basketball star Kevin Durant, then of the Oklahoma City … Read How To Avoid a Business Contract Bidding War
Writing the Negotiated Agreement
Some negotiations end with a negotiated agreement that is a plan of action rather than a signed contract – for example, a plumber agrees to fix the tile damage caused by his work. Other negotiations wouldn’t be appropriate to commemorate in writing, such as how you and your spouse decide to discipline your young … Read Writing the Negotiated Agreement
Negotiating with Liars: Bluffing versus Puffing
How many time have you sat at the bargaining table, and wondered, “am I negotiating with liars?” And to your own self be true—how many times have you been untruthful in a negotiation? The example below shines a light on how lies can get negotiators into hot water. Back in July 2014, Jesse Litvak, the former … Read Negotiating with Liars: Bluffing versus Puffing
Dear Negotiation Coach: Negotiating a Win Win Relationship with Friends
Though we’re often advised against mixing friends and business, it’s not only inevitable at times; it can also be beneficial to everyone involved. The key is to negotiate in a way that ensures a win win relationship between parties, and in bigger business deals, that may include seeking outside help. We connected with Guhan Subramanian, Joseph … Read More
Dear Negotiation Coach: Coping with a Change-of-Control Provision
We recently received a question regarding a change-of-control provision and how to move forward with potentially renegotiating a contract. We spoke with Faculty Chair, Program on Negotiation at Harvard Law School, Guhan Subramanian, to answer the question. Q: I represent a company—let’s call it “ClientCorp”—that has a long-term contract with another company, “TargetCorp.” A change-of-control … Read More
Business Negotiation Skills: How to Deal with a Failing Business Partnership
It had seemed like the beginning of a fruitful relationship. In April 2012, six wealthy businessmen teamed up to buy the Philadelphia Inquirer and several affiliated businesses for $61.1 million, promising to work together to reverse the newspaper’s flagging fortunes. Their infusions of cash and appointment of a Pulitzer Prize–winning reporter, William K. Marimow, as … Read More
Win-Win Bargaining: Private Negotiation, Public Auction, or Both?
When Amazon and Apple each began scouting locations for a new campus in 2017, we might have expected them to follow similar negotiating strategies aimed at win-win bargaining. In fact, their searches were very different:
Amazon set off a frenzy in September 2017 when it announced it was soliciting bids from cities interested in hosting its second headquarters, … Read More
Dear Negotiation Coach: Deal Structuring and Negotiating with “Bad Acts”
Deal structuring and negotiating can feel challenging in the best of situations. But when you’re dealing with “bad acts,” there are additional factors to consider when you structure your negotiation strategy. This is what one reader asked about when facing a deal to buy out a company. Here’s their question: Q: I work for an international … Read More
Ask A Negotiation Expert: Trends in Merger and Acquisition Strategies
We recently spoke with Guhan Subramanian, the Joseph H. Flom Professor of Law and Business at Harvard Law School and the H. Douglas Weaver Professor of Business Law at Harvard Business School, regarding trends in merger and acquisition strategies and how that’s impacting negotiations. Negotiation Briefings: In your research, you’ve found that the way in which … Read More
Beware the Winner’s Curse in Auctions
In 2017, Amazon announced it was taking bids from cities interested in being the site of its second headquarters, known as HQ2. The online behemoth said it would be investing $5 billion in a campus and creating 50,000 well-paying jobs. Cities and regions across North America snapped to attention, and Amazon received 238 proposals. Amazon asked applicants … Read Beware the Winner’s Curse in Auctions
Dear Negotiation Coach: Can External Advisers Hinder a Problem Solving Approach?
There are numerous advantages to hearing from external advisers and experts in a high-stakes negotiation. However, when talks are at an impasse, limiting the negotiation to a small number of participants may be a more beneficial problem solving approach than including outside opinions. This was at the heart of a recent question answered by Guhan Subramanian, … Read More
Dear Negotiation Coach: How Do I Handle Reverse Auctions in a Business Contract Negotiation
Reverse auctions are becoming a more frequent reality of business contract negotiations as companies work to cut expenses. In most negotiations, however, price is not the only issue. Guhan Subramanian, Joseph Flom Professor of Law & Business at Harvard Law School and Douglas Weaver Professor of Business Law at Harvard Business School, answered a question … Read More
Dear Negotiation Coach: How Can I Use Deal Structuring and Negotiating to Resolve an Impasse?
When two sides seem far apart on a contract dispute, careful and creative deal structuring and negotiating can often result in a winning agreement for both sides. Here’s an example of how that might look in a business deal, based on a question we recently received. “My company, a large multinational, contracts with an outside vendor … Read More
Amazon–Whole Foods Negotiation: Did the Exclusive Courtship Move Too Fast?
When competing with multiple parties to secure a coveted resource, such as your dream house, a cool invention, or a talented new hire, it can be hard to stand out from the pack. Amazon faced that challenge in its $13.4 billion acquisition of upscale grocer Whole Foods in 2017, as reported by Alex Morrell for … Read More
Navigating Business Relationships Using Negotiation
A three-year dispute between Starbucks and Kraft Foods over distribution of Starbucks packaged coffee in grocery stores was resolved in 2013 when an arbitrator determined that Starbucks had breached its agreement with Kraft and ordered the coffeemaker to pay the food giant $2.75 billion. … Read More
In Preparation for Negotiation, Choose the Right Process
In preparation for negotiation, sellers face a choice between negotiating one on one with buyers, holding an auction, or combining elements of both processes. Consider the different paths that Amazon and Apple followed in 2017 when each began scouting locations for a new campus:
Dangling the prospect of a $5 billion campus and about 50,000 jobs, … Read More
Must-Read Negotiation Books for 2019
The year 2017 offered plenty of negotiation hits and misses in the realms of government, business, and beyond. To avoid failed negotiations in 2018, politicians, business leaders, and the rest of us would be wise to explore the following recent negotiation books, which can help steer us through our most difficult negotiating dilemmas: … Read Must-Read Negotiation Books for 2019
Case Study of Business Negotiations and Deal Making: Giving Voice to Negotiators Away from the Bargaining Table
Sometimes negotiators focus too much on the bargaining session at hand, to the detriment of bargainers away from the negotiation table, a group whose concerns and input is just as valid as those of the negotiators themselves. Here are some negotiation tips to help make sure your bargaining strategies include the voices and concerns of … Read More
Bargaining at a Fever Pitch
Have you ever won an auction only to realize later that you overbid for the prize? In competitive bidding situations, it’s easy to get carried away in the heat of the moment and overpay. The Boston Red Sox 2006 procurement of Japanese pitching phenomenon Daisuke “Dice-K” Matsuzaka offers a lesson in keeping cool in these … Read Bargaining at a Fever Pitch
An Exclusivity Period: A Useful Tool for Eliminating the Competition
Imagine you’re competing with multiple parties to secure a coveted resource, such as your dream house, a cool invention, or a talented new hire. How might you stand out from the pack and win the prize? While negotiating its $13.4 billion acquisition of upscale grocer Whole Foods in 2017, online retailer Amazon did so in … Read More
The Winner’s Curse: Will You Be Its Next Victim?
Imagine that you’re up for a new job that you’d like very much. At the end of a long hiring process, the HR manager asks you to name your price. You propose a salary that you believe to be ambitious, expecting some haggling to follow. Instead, the HR manager smiles and holds out her hand … Read More
Negotiation in the News: Before building a coalition, consider the consequences
This past July, the News Media Alliance (NMA), a trade association of approximately 2,000 U.S. and Canadian news organizations, announced that it was planning to ask Congress for a limited antitrust exemption to allow its members to negotiate collectively with Google and Facebook regarding digital advertising. With consumers increasingly accessing their news through web platforms, … Read More
When Two Deals are Better than One
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. … Read When Two Deals are Better than One
Win-Win Business Negotiations: The Wachovia Buyout
Changing financial and legal conditions can create and destroy wealth in the blink of an eye. How does a negotiator take advantage of such periods of change? During the financial crisis of 2008, Wachovia Corporation found itself looking for a buyer to avoid collapse while the financial industry as a whole was the grips of … Read More
A Bidding War at Sundance
Filmmaker Nate Parker sticks to his dreams in a heated “negotiauction.” Most sellers dream about driving up the price of a commodity in a bidding war. But how can you stay true to your nonfinancial goals in an auction fixated on price? Nate Parker, the filmmaker, star, and producer behind the film The Birth of a … Read A Bidding War at Sundance
Pull Ahead of the Pack with a “Negotiauction”
Robert Barnett, a corporate attorney based in Washington, D.C., moonlights as a book agent for celebrity politicians—including Barack Obama, Laura Bush, and Bill and Hillary Clinton. New York editors line up to sign Barnett’s clients and, they hope, rake in blockbuster profits. Barnett’s technique is to introduce his latest superstar to the major publishing houses and … Read Pull Ahead of the Pack with a “Negotiauction”
From negotiation to auction: The rise of real-time bidding
Because of a technological innovation called real-time bidding, or RTB, more and more online-advertising transactions are being completed through auctions rather than negotiations. The transformation could foreshadow similar changes in other realms, as negotiations gain the potential to become more automated. How RTB works In the dark ages of the Internet, websites would negotiate individually with potential … Read More
Sellers: Stay out of legal hot water
When it comes to business negotiations, you probably understand the importance of being as principled as possible to protect your reputation and ward off legal trouble. You probably expect your counterparts to follow the straight and narrow as well. Yet negotiators often have only a fuzzy grasp of which claims and strategies are legal and … Read Sellers: Stay out of legal hot water
Negotiation? Auction? A Deal Maker’s Guide
Guhan Subramanian, Joseph Flom Professor of Law and Business, Harvard Law School; Douglas Weaver Professor of Business Law, Harvard Business School; Author of Negotiauctions When you have something to sell, should you hold an auction or negotiate a collaborative deal that delivers maximum value to both sides? In this article, professor Guhan Subramanian compares the risks … Read Negotiation? Auction? A Deal Maker’s Guide
Professor Subramanian Featured in NYTimes DealBook
PON Executive Committee member and author of the book Negotiauctions was featured in the New York Times DealBook discussing the effectiveness of go-shop provisions in contracts. To read the full article, click here. Professor Subramanian found that “despite the conventional wisdom, go-shops were generally effective and did indeed result in subsequent bids. The one exception … Read More
Prof. Guhan Subramanian featured in Forbes India
Professor Guhan Subramanian was featured in Forbes India in April 2010. Professor Subramanian discusses his latest book Negotiauctions: New Dealmaking Strategies for a Competitive Marketplace, which was published in February 2010. Click here to read the full article. Professor Subramanian will be teaching Advanced Negotiation: Deal Design and Implementation at the Harvard Negotiation Institute June 14-18. For … Read Prof. Guhan Subramanian featured in Forbes India
Professor Guhan Subramanian featured in TheDeal.com
Guhan Subramanian is one of the most prominent — and ambitious — legal academics of his generation. The 39-year-old is the only person who’s ever held tenured positions at Harvard’s law and business schools, and on the side he advises companies on M&A and corporate governance. After authoring numerous academic papers and a corporate law … Read More