Bringing together auction theory and negotiation theory in a practical and accessible way, here is an authoritative guide to negotiating deals.
Today’s increasingly competitive marketplace is filled with business transactions that include elements of both negotiations and auctions, yet the received wisdom on deal-making treats these two mechanisms separately. Leading dealmaking scholar Guhan Subramanian explores the ubiquitous situation in which negotiators are “fighting on two fronts”—across the table, of course, but also on the same side of the table with known, unknown, or possible competitors. Delving into case studies as diverse as buying a house, haggling over the rights to the television show Frasier, and selling “toxic” assets into the U.S. government’s bailout fund, Subramanian combines meticulous research, field experience, and classroom-tested strategies to create an indispensable guide for anyone involved in buying or selling everything from cars to corporations. charts
Dealmaking: The New Strategy of Negotiauctions
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“This brilliant book exposes the connections between negotiations and auctions, and will be indispensable for every professional involved in dealmaking.” (Robert Mnookin, author of Beyond Winning)
--This text refers to the
Paperback
edition.
About the Author
Guhan Subramanian, the Joseph Flom Professor of Law and Business at the Harvard Law School and the Douglas Weaver Professor of Business Law at the Harvard Business School, is the first person in the history of Harvard to hold tenured appointments at both schools. He lives in Newton, Massachusetts.
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1 of 1 people found the following review helpful
By J. R. Ribes
Format:Hardcover
This book changed the way I approach any negotiation or auction. In fact, most almost all the auctions I have been through were negotiauctions. If I had had the chance to read this book 10 years ago, life would be different...
The book is very well organised.
The first part was extremely useful to review the basic concepts of (pure-)auctions and (pure-)negotiations. Even if we all think we know the basics, let's assume it, it's great when you can review them with one of the masters.
The second part was a real eye-opener to realise through how many negotiauctions I had been through without knowing it. Well, thinking they were pure-auctions.
The book is very well organised.
The first part was extremely useful to review the basic concepts of (pure-)auctions and (pure-)negotiations. Even if we all think we know the basics, let's assume it, it's great when you can review them with one of the masters.
The second part was a real eye-opener to realise through how many negotiauctions I had been through without knowing it. Well, thinking they were pure-auctions.
3 of 4 people found the following review helpful
Format:Hardcover
"Negotiauctions" is essential reading for anyone considering the sale of valuable assets. Subramanian begins by pointing out that assets most often change hands neither through pure negotiation or pure auction, but through mechanisms the combine elements of both. He identifies three strategies readers can use in complex deal-making strategies. The book also examines case studies involving buying a house, the rights to TV show 'Frasier,' and selling 'toxic' assets into the government's bailout fund.
BATNA (best alternative to a negotiated agreement, or What do you do if you don't reach a deal?) for NBC in the Frasier case probably meant a bidding war to replace 'Frasier.' Each participant needs to estimate that for all participants. They also need to determine their 'reservation value' - the lowest amount they would accept as seller or pay as buyer. When negotiating, suggests making a first offer as high/low as one can "tell a story around." Those on the receiving end of a first offer should strongly consider the 'mid-point rule' in shaping their counteroffer. A win-win move is to introduce 'contingent contracts' to align the incentives of both parties (eg. ratings-based increases/decreases) that also permit diagnosing the other sides' honesty.
"When to Auction" is a fairly mundane chapter.
"Negotiauctions" also covers creating illusions via sealed bids with comments such as "You're the low bidder" (when there's only one bidder), leaving pizza boxes from supposedly prior due diligence efforts, artificially limiting slots for due diligence, survivor rounds, etc.
Subramanian suggests sealed bids instead of open outcry, except in the presence of 'affiliated signals' (eg. the opportunity to learn a competitor is willing to bid high).
Stalking horse bids are used in bankruptcy proceedings by sellers to prevent lowball offers.
Explains reverse auctions, Dutch auctions, English, and Japanese auctions.
Again - must reading for anyone considering the sale of valuable assets.
BATNA (best alternative to a negotiated agreement, or What do you do if you don't reach a deal?) for NBC in the Frasier case probably meant a bidding war to replace 'Frasier.' Each participant needs to estimate that for all participants. They also need to determine their 'reservation value' - the lowest amount they would accept as seller or pay as buyer. When negotiating, suggests making a first offer as high/low as one can "tell a story around." Those on the receiving end of a first offer should strongly consider the 'mid-point rule' in shaping their counteroffer. A win-win move is to introduce 'contingent contracts' to align the incentives of both parties (eg. ratings-based increases/decreases) that also permit diagnosing the other sides' honesty.
"When to Auction" is a fairly mundane chapter.
"Negotiauctions" also covers creating illusions via sealed bids with comments such as "You're the low bidder" (when there's only one bidder), leaving pizza boxes from supposedly prior due diligence efforts, artificially limiting slots for due diligence, survivor rounds, etc.
Subramanian suggests sealed bids instead of open outcry, except in the presence of 'affiliated signals' (eg. the opportunity to learn a competitor is willing to bid high).
Stalking horse bids are used in bankruptcy proceedings by sellers to prevent lowball offers.
Explains reverse auctions, Dutch auctions, English, and Japanese auctions.
Again - must reading for anyone considering the sale of valuable assets.
2 of 3 people found the following review helpful
Format:Hardcover|Amazon Verified Purchase
For anyone who likes Freakonomics-style books, this is great. The writing is clear and the topic compelling. If you have any interest in deal-making, markets, negotiation, auctions, or are just a smart, curious person who wants to learn a little more about how things are bought and sold, this is a nearly-perfect book. You won't look at ebay, or buying a new car, the same again.
