Topic 66
Negotiation: Introduction and Overview
Topic 66 provides an overview of the process of negotiation, which is fully developed over the course of the next 16 topics.
OVERVIEW OF NEGOTIATION CONSIDERATIONS AND CONDUCT GUIDELINES
- Negotiation starts as you make the first phone contact or enter the first face-to-face meeting to discuss how to proceed, deal value, risk allocation, and so forth, all of which, it is hoped, leads to a deal.
- Knowing what to expect and that the unexpected will occur is a unique thrill.
- Be prepared—homework wins (see Topic 10).
- Consider how, and in what order, you want to present your position (see Topics 9, 68, 84, and 85).
- What do the facts of the target business today tell you about tomorrow (see Topics 1, 4, 10, and 56)?
- What are tomorrow's likely scenarios, risks, and why (see Topics 1, 4, and 10)?
- How can the apparent risk impacts be managed—controllable versus not controllable (see Topics 3 and 26)?
- Why are your views different/same as those of the other side?
- How do the scenarios play out in terms of valuation levels (see Topics 58 and 59)?
- What is your position on key valuation and consideration issues and assumptions (see Topic 67)?
- How did you value and weigh the probability of occurrence of the business scenarios, and why?
- Valuation methods employed (discounted cash flow [DCF], corroborating comparables and multiples, transaction).
- Use of leverage in the financing mix (see Topics 40 to 44).
- All key assumptions, and why.
- Applied discounts ...
