Intelligent M & A: Navigating the Mergers and Acquisitions Minefield, 2nd Edition

CHAPTER 9Negotiation and Bidding

With the satisfactory due diligence work and pricing performed (although still needing to be updated throughout the deal), a company will know, as much as is possible, the strengths and weaknesses of the target. Then, if it continues to make strategic sense, the parties progress rapidly towards the stage of finalizing the details of the deal and signing the sale and purchase agreement. Feeding their due diligence work into the closing negotiations, the various parties to the deal process should typically employ business intelligence techniques to identify those risks which can be mitigated by way of some sort of “protection,” such as a price reduction or warranty which would be conditional as part of the deal closure. Excellent intelligence will also enhance the negotiating strength, fulfilling the aphorism: “Knowledge is power.”

Business Intelligence in Effective Negotiations

For the participants in a deal, the final stage of the negotiations – replete with posturing, horse-trading, wrangling, and perhaps even threatening to walk away – is best conducted with Sun Tzu's “foreknowledge.” Any information about the other parties to a deal is useful, not simply of opponents but also about your own company, business partners, and providers. Such information can aid the conclusion of a deal with a greater degree of value to whosoever secures it. Whether employing considerable ingenuity to obtain information or doing so with little trouble, business intelligence ...