Comments on: The aftershock of hard negotiations http://www.theprivateequiteer.com/the-aftershock-of-hard-negotiations/ A vignette into the aberrant thoughts of a private equiteer Sat, 28 Aug 2010 13:18:38 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Toning it down for the team | The Private Equiteer - A Private Equity Blog http://www.theprivateequiteer.com/the-aftershock-of-hard-negotiations/comment-page-1/#comment-4210 Toning it down for the team | The Private Equiteer - A Private Equity Blog Thu, 17 Sep 2009 02:42:29 +0000 http://www.theprivateequiteer.com/?p=2225#comment-4210 [...] wrote a post recently called the aftershock of hard negotiations. The general premise being, if you must live with vendors in the future (as part owners), then [...] [...] wrote a post recently called the aftershock of hard negotiations. The general premise being, if you must live with vendors in the future (as part owners), then [...]

]]> By: The Private Equiteer http://www.theprivateequiteer.com/the-aftershock-of-hard-negotiations/comment-page-1/#comment-4111 The Private Equiteer Sun, 13 Sep 2009 06:50:07 +0000 http://www.theprivateequiteer.com/?p=2225#comment-4111 Great point about the real art being predictive ability and structure. Coming into PE, I thought it was all about strategic value-add... as if a PE team could invest in any business and be successful due to superior business acumen. Quickly I realises how important structure is, especially if the investment turns. I also came to learn that past performance often does have a bearing on the future. Great point about the real art being predictive ability and structure. Coming into PE, I thought it was all about strategic value-add… as if a PE team could invest in any business and be successful due to superior business acumen. Quickly I realises how important structure is, especially if the investment turns. I also came to learn that past performance often does have a bearing on the future.

]]> By: Shibumi http://www.theprivateequiteer.com/the-aftershock-of-hard-negotiations/comment-page-1/#comment-4097 Shibumi Fri, 11 Sep 2009 13:39:55 +0000 http://www.theprivateequiteer.com/?p=2225#comment-4097 My take on PE negotiations is that this win/lose type outcome should be avoided as discussed, and perhaps having the old good cop bad cop routine works, where the good cop ends up on the board and the bad cop bows out after negotiations. ...but the real art of negotiation IMHO resides in A:) understanding the value play better than the antagonist. The sale of ice is easy - take the product for X benefits. Tilt the cost / benft analysis and you're there. The sale of most ideas and structures and terms in PE require a huge degree of judgement about the outcome of highly subjective infinite scenarios (investment predicitions) and their impacts on terminal value. More like "take the ice and in future if the consumer in america continues to guzzle oil and avoids hybrid and diesel derivatives then the prevailing trade winds could yield a warmer environment and assuming no shift from igloo's to brick built houses over this peirod this ice could be of use....etc". (breathe) The better understading of value and the leverage of structures provides a win in future - at the end of the deal rather than the outset. B:) Knowing how you can practically enforce rights and knowing who you can pragmatically influence to sway outcomes during a deal by winning friends, influencing people and being sneaky, to gain your own ends at the same time as others are seeking to gain their ends. Messy stuff, but legals and enforcement thereof are often messier. Viewed in this light the real art of negotiation is then superior investment calls (predictive ability) and applied maths (for structuring), and being effective in 'people persuasion' enivronments. You can "win" without the other guy even really being aware that he has lost, just a vague sense of disquiete as to why his yacht is smaller than yours....which he will write off to luck by virtue of his lack of understanding of complex structuring, long range scenario forecasting and people dynamics. Lower IQ and lower EQ blames fate... Ciao My take on PE negotiations is that this win/lose type outcome should be avoided as discussed, and perhaps having the old good cop bad cop routine works, where the good cop ends up on the board and the bad cop bows out after negotiations.

…but the real art of negotiation IMHO resides in
A:) understanding the value play better than the antagonist. The sale of ice is easy – take the product for X benefits. Tilt the cost / benft analysis and you’re there.
The sale of most ideas and structures and terms in PE require a huge degree of judgement about the outcome of highly subjective infinite scenarios (investment predicitions) and their impacts on terminal value. More like “take the ice and in future if the consumer in america continues to guzzle oil and avoids hybrid and diesel derivatives then the prevailing trade winds could yield a warmer environment and assuming no shift from igloo’s to brick built houses over this peirod this ice could be of use….etc”. (breathe)
The better understading of value and the leverage of structures provides a win in future – at the end of the deal rather than the outset.

B:) Knowing how you can practically enforce rights and knowing who you can pragmatically influence to sway outcomes during a deal by winning friends, influencing people and being sneaky, to gain your own ends at the same time as others are seeking to gain their ends. Messy stuff, but legals and enforcement thereof are often messier.

Viewed in this light the real art of negotiation is then superior investment calls (predictive ability) and applied maths (for structuring), and being effective in ‘people persuasion’ enivronments. You can “win” without the other guy even really being aware that he has lost, just a vague sense of disquiete as to why his yacht is smaller than yours….which he will write off to luck by virtue of his lack of understanding of complex structuring, long range scenario forecasting and people dynamics. Lower IQ and lower EQ blames fate…
Ciao

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