Topic 73
Negotiation: Closing the Bid-Ask Negotiating Gap
Topic 73 explores the approaches required to work through a final bid-ask gap that always exists between buyers and sellers.
MANAGING AND WORKING THROUGH THE GAP
- After initial offers and risk allocation positions have been put on the table and thoroughly discussed, a bid-ask gap will exist.
- Explore the basis for the other side's valuation, risk perception, and positions. Gain an understanding of the other side's perception of the fundamental drivers of value and risk allocation and how they differ from yours. See Topic 72 for some of the issues to expect.
- A useful place to revisit is a side list of unresolved open issues maintained during the negotiation.
- Ask the other side if that is everything that needs to be on the list.
- With your team, divide the list between seller wants and buyer wants. Identify trade-off positions and global or bundled asks and concessions as a package: “We would consider giving on point one and point two in favor of the other side if the other side will give us point three.”
- Present the trade-off positions to the other side.
- Narrow the list as concessions are made.
- Discuss, assess, and revise positions to show flexibility.
- Expect flexibility from the other side, and ask for it: “I can see my way to revise my thinking or accept greater risk if you can recognize the following. …”
- Have logical positions regarding revised assumptions and risks undertaken.
- Unsupported or illogical positions or ...
