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Negotiauctions: New Dealmaking Strategies for a Competitive Marketplace, by Guhan Subramanian
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Bringing together auction theory and negotiation theory in a practical and accessible way, here is an authoritative guide to negotiating deals.
Today’s increasingly competitive marketplace is filled with business transactions that include elements of both negotiations and auctions, yet the received wisdom on deal-making treats these two mechanisms separately. Leading dealmaking scholar Guhan Subramanian explores the ubiquitous situation in which negotiators are “fighting on two fronts”―across the table, of course, but also on the same side of the table with known, unknown, or possible competitors. Delving into case studies as diverse as buying a house, haggling over the rights to the television show Frasier, and selling “toxic” assets into the U.S. government’s bailout fund, Subramanian combines meticulous research, field experience, and classroom-tested strategies to create an indispensable guide for anyone involved in buying or selling everything from cars to corporations. charts- Sales Rank: #1454122 in Books
- Published on: 2010-02-01
- Original language: English
- Number of items: 1
- Dimensions: 9.50" h x 1.00" w x 6.40" l, .93 pounds
- Binding: Hardcover
- 256 pages
Review
This brilliant book exposes the connections between negotiations and auctions, and will be indispensable for every professional involved in dealmaking. --Robert Mnookin, author of Beyond Winning"
About the Author
Guhan Subramanian, the Joseph Flom Professor of Law and Business at the Harvard Law School and the Douglas Weaver Professor of Business Law at the Harvard Business School, is the first person in the history of Harvard to hold tenured appointments at both schools. He lives in Newton, Massachusetts.
Most helpful customer reviews
4 of 5 people found the following review helpful.
Comprehensive and Well Organized -
By Loyd Eskildson
"Negotiauctions" is essential reading for anyone considering the sale of valuable assets. Subramanian begins by pointing out that assets most often change hands neither through pure negotiation or pure auction, but through mechanisms the combine elements of both. He identifies three strategies readers can use in complex deal-making strategies. The book also examines case studies involving buying a house, the rights to TV show 'Frasier,' and selling 'toxic' assets into the government's bailout fund.
BATNA (best alternative to a negotiated agreement, or What do you do if you don't reach a deal?) for NBC in the Frasier case probably meant a bidding war to replace 'Frasier.' Each participant needs to estimate that for all participants. They also need to determine their 'reservation value' - the lowest amount they would accept as seller or pay as buyer. When negotiating, suggests making a first offer as high/low as one can "tell a story around." Those on the receiving end of a first offer should strongly consider the 'mid-point rule' in shaping their counteroffer. A win-win move is to introduce 'contingent contracts' to align the incentives of both parties (eg. ratings-based increases/decreases) that also permit diagnosing the other sides' honesty.
"When to Auction" is a fairly mundane chapter.
"Negotiauctions" also covers creating illusions via sealed bids with comments such as "You're the low bidder" (when there's only one bidder), leaving pizza boxes from supposedly prior due diligence efforts, artificially limiting slots for due diligence, survivor rounds, etc.
Subramanian suggests sealed bids instead of open outcry, except in the presence of 'affiliated signals' (eg. the opportunity to learn a competitor is willing to bid high).
Stalking horse bids are used in bankruptcy proceedings by sellers to prevent lowball offers.
Explains reverse auctions, Dutch auctions, English, and Japanese auctions.
Again - must reading for anyone considering the sale of valuable assets.
2 of 3 people found the following review helpful.
Dealmaking is very complex and not for everyone
By Curt's Comment
A good deal is when both parties feel OK about the deal. A great deal is when one party feels they got the best deal. Professor Subramanian provides detailed insights into three primary dealmaking situations. The preferred one is called "negotiauctions". This book challenged me. I have always have been in deals involving customers, sales, product teams, and more recently, K-12 grade learners.
The book is heavy with theory, jargon (ZOPA), and sometimes just too much detail. In fairness, it had some great "real" behind the scene case studies concerning the Fraiser TV show with NBC and Paramount; the baseball deal with A-Rod (Alex Rodriquez) and the Texas Rangers; Pittsburgh Steelers sale of their football franchise in 2008; and the U.S government's involvement with TARP funds for the toxic assets of the Sachs bank.
This book was not fun reading but I did learn. It was a good value (about $12 on Amazon) compared to taking a course at Harvard by the professor. If you want to improve your dealmaking on a car or a house (on the average, realtors take longer to sell their houses than their clients do study), then just read Chapter 10 and learn about a great concept called shut-down moves. Dealmaking is more complex in the 21 century and this book proves it. I would recommend this book to professional sales people or buyers but not for the average professional as it may be too over the top.
2 of 3 people found the following review helpful.
Great book!
By Douglas Stone
For anyone who likes Freakonomics-style books, this is great. The writing is clear and the topic compelling. If you have any interest in deal-making, markets, negotiation, auctions, or are just a smart, curious person who wants to learn a little more about how things are bought and sold, this is a nearly-perfect book. You won't look at ebay, or buying a new car, the same again.
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