The Gang's All Here

Two party negotiations are tough.  Try to put together three or more parties, and the the process can quickly become unmanageable.  And, unfortunately, there are a limited number of techniques you can use to try to bring things back under control.

I've had a few tastes of this, particularly where it pertains to acquisitions, and the result has usually ranged somewhere between frustrating and completely impossible.  Still, with enough persistence and creativity, most of these deals can be pulled off.

In one particular three-party deal, I ended up forcing the responsibility for one of the negotiations back on the other party.  In this situation there were two shareholders of the company I wanted to acquire -- one actively running the place, and the other estranged and competing against the company.  The active owner conducted a series of long discussions with me, and ultimately we reached a "meeting of the minds" on the deal.  The problem was, the estranged partner had the power to block our agreement, which we felt certain would lead to either an outrageous demand for price, or a complete refusal to allow us to complete the transaction.  The only way to solve the problem was to have the active owner negotiate with the estranged partner to purchase his shares prior to our agreement being finalized.  Fortunately, the active owner was somehow able to sort this out, and the deal went through.

In a second deal -- this one between my division and multiple distributors -- I conducted three negotiations in parallel.  The first transaction was the purchase of an ailing distributor -- a relatively simple matter to sort through.  On the day that transaction was completed, I planned to take those assets and contribute them (plus some cash) to a competing distributor, thus taking a minority, but important, stake in that firm.  That would allow me to convert the distributor to my products.  Complicating this was a territory conflict between the competitive distributor, and another, unrelated distributor in my fold.  To solve this, I also needed to negotiate a joint venture between the competitive distributor and the unrelated one to cover the overlapping territory.  These three negotiations all had to be conducted simultaneously and in the strictest confidence, so they could all close at the same time.  We met most of those criteria, but failed on the confidentiality aspect, which ultimately led to a battle to the death in the territory over the next three years.  That battle we won, but not without some pretty deep scars.

In my final example, I found myself trying to negotiate a joint venture arrangement with an Israeli kibbutz.  A kibbutz is a social organization somewhat akin to a commune, but with joint ownership of all the community's assets.  In essence, I found myself negotiating with "everyone" that participated in the organization, as interests varied across the shareholders from financial performance, to employment, to social mission.  This deal eventually fell apart when it became clear that negotiating the joint venture would just be the tip of the iceberg.  It appeared that ongoing management would be nearly impossible.

If you have a multi-party negotiation in front of you.  First try the "divide and conquer" approach, preferably pushing responsibility for at least one of the deals back on another party.  If the only way the transaction works is for you to simultaneously be in the middle of multiple negotiations, resign yourself to a lengthy and potentially frustrating experience.  And be prepared for the entire deal to fall apart over seemingly trivial issues that you can't resolve.

And know when to simply say -- this is too much.  14.1

 Other Recent Posts:

NavigatingCorpPol_FINAL (2).jpg

If you are intrigued by the ideas presented in my blog posts, check out my other writing.

Cover for Heir Apparent, my most recently published novel.

Cover for Heir Apparent, my most recently published novel.


Novels: LEVERAGEINCENTIVIZEDELIVERABLES and now HEIR APPARENT (published 3/2/2013)-- note, the ebook version of DELIVERABLES (a prequel to HEIR APPARENT) is on sale for a limited time at Amazon for $4.99.

These novels are all based on extensions of my experiences as a senior manager in the world of public corporations.