Bursts of anger, personal insults, additional attempts to drive a wedge between me and the buyer, threats of business retaliation, passive-aggressive behaviors and good-cop bad-cop tactics all were in full display in our meetings over the following months.  Because we had so carefully set the table for our negotiations, we were able to meet the seller’s strategy and tactics in a calm and measured way.  In the course of our negotiations, the seller killed the deal three times.  Each time provided me the opportunity to re-convey the likely impact on the seller’s business of his decision. Most importantly, I carefully planned and executed numerous ways in which the seller could re-engage in our discussions without loss of face.

OUTCOME

As a direct result of our negotiations, I was able to renegotiate the prior settled deal in the following ways:

• The purchase price was reduced a whopping 75%.
• Through a new royalty structure, the seller’s interest became completely aligned with the buyer’s success.
• The seller conveyed all worldwide rights to his brand and technology to the seller (instead of the limited license originally proposed). Through a combination of various legal constraints and an assignment by the seller of his future related inventions, the buyer was assured of truly acquiring the assets necessary for him to effectively implement his expansion strategies.
• The risk to the buyer in making the purchase was massively reduced through a series of extended representations from the seller concerning the quality and nature of the assets being purchased—rather than the AS IS sale originally mandated by the seller.
• Easy to implement, burden-shifting remedies for the seller’s breach were created so that the seller’s compliance with all terms of the agreement was assured.

REFLECTIONS

We all have met people who have been able to get their way in a negotiation through belligerence, anger, intimidation, intransigence and persistence.  They often succeed by wearing the other party down—emotionally and substantively—to the point that the other party capitulates to their demands in a desire to end the turmoil.  In this situation, the seller’s rock star status in his industry gave these behaviors more power and leverage.  Having to negotiate with this type of personality and then to have to re-negotiate so many terms already fully discussed and acquiesced to by the buyer was particularly challenging.

While the final deal was a far cry from the extremely one-sided terms that the seller originally thought he had so shrewdly negotiated, in the end the deal was balanced and durable.  If the buyer were to succeed wildly in his new business, the seller not only would be required to actively cooperate and participate constructively in that success but also would benefit significantly by doing so.  The elegance of our result was that the seller was given the opportunity to make a substantial portion of his originally contemplated price if the business were successful.  And should that occur, the buyer’s share of profits would have been generous compared to his original best-case scenario.  Had attention to deal set-up and flawless execution not been achieved, the deal would never have happened or would have happened with disastrous results for the buyer.

Take Away:

When you feel you have no leverage and you cannot accept existing deal terms, collaborative negotiation science can provide the alternative to losing the deal or entering into a bad one.