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
Learn how to negotiate like a diplomat, think on your feet like an improv performer, and master job offer negotiation like a professional athlete when you download a copy of our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, 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:
Strictly limited to 60 participants who have completed a prior course in negotiation, this first-of-its-kind program offers unprecedented access to experts from Harvard Law School, Harvard Business School, and the Massachusetts Institute of Technology—all of whom are committed to delivering a transformational learning experience. By working closely with them, you will: … Read More
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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 More
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When Amazon and Apple each began scouting locations for a new campus this past year, we might have expected them to follow a similar search process. But, in many ways, their searches have been polar opposites:
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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 More
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
This month, 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, updates us on negotiations in the high-flying world of mergers and acquisitions (M&A). Subramanian is the author of Dealmaking: The New Strategy of Negotiauctions (W.W. … Read More
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On September 7, 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 the campus, which was expected to create 50,000 well-paying jobs. Amazon’s wish list for its winning city or region included a … Read More
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QUESTION For years, my company had long-term relationships with our customers, in which we would sit down for annual negotiations. But over the past few years, more of our customers have required us to participate in “reverse auctions” run by procurement departments. Sometimes these auctions are online, and sometimes they are in person; sometimes they are … Read More
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 More
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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 More
Q: I work for an international nonprofit that tries to eliminate “bad acts” around the world—not illegal activities, but ones that we consider unethical. We are currently negotiating with a U.S. business owner who is engaged in these bad acts. His business is generating losses, so we are trying to buy him out and put … Read More
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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 More
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
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