Successful Negotiations - part 6 pps

Answers Listening Questions 1 The basic source of disagreement between Maxine and Peter is price – Maxine will not sell business for less than €15 million; Peter “can’t do better than,”

Answers

Listening Questions

1) The basic source of disagreement between Maxine and Peter is price – Maxine will not sell business for less than €15 million; Peter “can’t do better than,” that is, can’t offer more than €11.5 million

2) Maxine says that the market is going nowhere but up – that is, continuing to expand – and she says that she’s got “tremendous value here – good people, good products, and a solid business plan.”

3) Due diligence refers to doing careful research before a big purchase or other major life decision

Language Review

A Useful Language

Clarifying positions

1 If I understand the position correctly, you are looking for better credit

terms, am I correct?

2 As we see it, this is the position at the moment:

3 How do you see our objectives?

4 Can I just summarize our positions as I see them?

Evaluating the position

Positive

5 Despite a couple points of minor disagreement, the arrangement under

discussion obviously has a lot to offer both sides

6 Though there are still a couple of loose ends to tie up, we feel overwhelmingly positive about the compromise that we’ve reached

7 This is a good offer – no doubt about it

Negative

8 Honestly, this offer leaves a lot to be desired, in our point of view

9 We’ve looked at the figures closely, and I can’t say that we currently have a

very high appraisal of this deal

10.At this point, I think it’s really tough to see where the value is for our side

B Giving Reasons

1 Let me explain why we have reached this conclusion

2 I also have to take into account many other factors

3 There are several aspects to this situation

4 I would just like to briefly run through seven points that explain our position

on this

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Online Activities: MP3 Podcast:

BEP 406 – Declining an Offer while Maintaining Goodwill

This episode will focus on declining an offer and what to do when someone

declines It is part of an ongoing series on negotiation skills

Negotiations don’t always go according

to plan Disagreement is part of life But

to build lasting relationships, coping

with failure is even more important than

celebrating success So in this show,

we’ll examine a deal that does not get

completed We’ll look at making a final

offer as well as expressing

dissatisfaction and regret We’ll focus on

maintaining goodwill even when talks

break down

Peter is the owner of mobile phone ringtone and game provider, Textacular He

is in discussions with Maxine about buying her company, Gamester Eventually, Peter wants to sell his business to a larger, regional service provider for a profit,

so he is attempting to roll up or buy other small companies to increase the value

of his business But Maxine wants €15 million for her business, and Peter isn’t prepared to pay that much

As you listen, pay attention to how Peter makes a final offer, how Maxine declines it, and how they both work to maintain goodwill

Listening Questions

1) What are Maxine’s reasons for staying firm on price?

2) What does Peter say to justify not being able to pay more?

3) How does Maxine leave open the possibility for future cooperation?

Vocabulary

To take into account: To consider “We need to take into account volatility in the market.”

Redundancies in sth.: (Often useless) repetition or overlap (Can also refer to lay offs – To make s/o redundant means to fire him or her.) “A merger is possible, but there are a lot of redundancies in our business model, so it’s going to be necessary to make cuts.”

To factor in sth.: To consider or include sth in your thinking “We should factor

in the price of oil when we draw up our business plan.”

Volatility in sth.: Volatility refers to quick or unexpected changes in price and values, for example in stock prices, in a market, or in a industry “Such high volatility in the market can make it difficult and risky to put a value on a company.”

Synergies (in sth.): Ways in which the whole is greater than the sum of the parts (1 + 1 is greater than 2) “Experienced negotiators search for synergies in order to make a deal that creates value for all sides.”

To outweigh sth.: To be more important than sth “At this point in our growth, the need for steady development outweighs the need to take risks.”

To run the numbers (on sth.): To make the calculations “We ran the numbers

on the merger, and we think their stock price is way overvalued.”

The way a deal is structured: Detailed arrangements of a business transaction, including, for example, credit terms, payment period, timing, and so on “The way a deal is structured is sometimes more important than the price being offered.”

There’s no two ways about it: There’s no alternative interpretation, no different way of looking at it “There’s no two ways about it – we’ve reached an impasse.”

To resolve differences: To solve problems or overcome disagreement “We encountered blockage early on, but later we were able to resolve our differences.”

To reach an impasse: To encounter an obstacle or blockage “We couldn’t agree

on price, so we reached an impasse there.”

To be too rich for someone’s blood: To be too expensive for someone “I’m sorry – I can’t pay that much It’s too rich for my blood.”

Dialog

[Part 1 of the dialog from BEP 405]

Maxine: So in short, we’ve thought about it a lot, and we really can’t budge

from our position

Peter: So if I’m getting you right, you won’t be willing to part with Gamester for

less than 15 million, right?

Maxine: Yes, that’s an absolute minimum Let me go over my reasons again

Peter: Go ahead

Maxine: For one, this market is going nowhere but up

Peter: Yes, I take your point

Maxine: For another, we’ve got tremendous value here – you’ve seen the

figures: good people, good products, and a solid business plan

-Peter: I’ve done months of due diligence, and I’m convinced of the value of a

merger

Maxine: I know you are, but we need a fair price for our business

Peter: On my side, though, we must take into account redundancies in our business operations and factor in the volatility in the market

Maxine: As you know, we think the synergies will outweigh all that

Peter: Yes, but we’ve run the numbers, and, depending on how the deal is

structured, I can’t do better than €11.5 million

Maxine: Well, there’s no two ways about it That doesn’t give us much more

to talk about

Peter: Well, I’m really sorry to hear you put it that way I was really hoping we

would resolve our differences

Maxine: Yes, but, anyhow, I think we should explore other possibilities for working together

Peter: Absolutely I look forward to it

Debrief

Although Peter and Maxine disagree, they end the discussion in a cordial, or friendly, manner: The possibility remains open for future cooperation Let’s look closely at the language they use

The dialog starts off with Peter giving his reasons for not being able to pay Maxine’s price of €15 million

Peter: On my side, though, we must take into account redundancies in our business operations and factor in the volatility in the market

Maxine: As you know, we think the synergies will outweigh all that.

To take into account and to factor in both mean to consider Peter says he must

“take into account” redundancies in their business operations, in other words,

areas of repetition or overlap Likewise, he must “factor in” volatility in the

market Volatility refers to quick or unexpected changes in price and values, for example in stock prices or in an industry High volatility can make it difficult or risky to put a value on a company

Maxine has a different evaluation from Peter, however: She believes synergies in their operations will outweigh – or be more important than – all the factors Peter has mentioned To review, synergy refers to a situation in which the whole is greater than the sum of the parts, in other words, a situation in which 1 + 1 is

greater than 2

How does Peter reply to Maxine? He makes his best offer Let’s listen again

Peter: Yes, but we’ve run the numbers, and, depending on how the deal is

structured, I can’t do better than €11.5 million

Peter has “run the numbers,” or analyzed the financial information Depending

on how the “deal is structured,” – which refers to credit terms, payment period,

and so on – he “can’t do better than €11.5 million” That is his final offer

Listen to some other example phrases for making a final offer

 That’s already just about as far as we can move on this issue

 We’ve already made many concessions, so we need to hold firm at this point

 If we bend any further, we just won’t be making any money on this deal

 The only way we’re going to reach agreement is by taking a win-win

approach

 That’s our final offer

Maxine has also reached a point where she cannot make any more concessions

She makes this clear by expressing her dissatisfaction with Peter’s offer

Maxine: Well, there’s no two ways about it That doesn’t give us much more

to talk about

“There’s no two ways about it” means there’s no other way to look at it – no way

forward

Sometimes it’s important to express that we are not satisfied with a proposal In

some situations, being clear about your feelings may actually help overcome blockage

What are some other ways to express dissatisfaction?

 Unless your side takes a different approach, at this point I just don’t see any

clear way forward

 Face it We’re wasting our time

 Frankly, we’re not satisfied with the offer on the table

 We seem to have reached an impasse

 That figure is just too rich for our blood

To reach an impasse means to encounter an obstacle or blockage To be too rich for someone’s blood means to be too expensive for someone

Next in the dialog, Peter replies by expressing regret that he and Maxine were unable to reach agreement

Peter: Well, I’m really sorry to hear you put it that way I was really hoping we would resolve our differences

Though he and Maxine have a difference of opinion, Peter is careful to maintain goodwill He avoids getting angry or accusing her And he leaves Maxine some room to change her mind – his statement that he is “sorry to hear her put it that

way” leaves open the possibility that she may put it another way another time

Peter’s expression of regret helps defuse or relax the situation Then, he ends on

a positive note – he says, “I was really hoping we would resolve their differences.”

Can you think of other language for expressing regret? Listen to some examples

 I’m sorry to hear that you feel that way

 It’s too bad that we see things differently on this issue

 Well, obviously this is frustrating for both sides

Maxine ends the conversation politely to leave the door open for further

discussions

Maxine: Yes, but, anyhow, I think we should explore other possibilities for working together

Peter: Absolutely I look forward to it

Of course, even when we’re feeling frustrated, it’s usually wise to keep the possibility open for future negotiation

Let’s examine some similar phrases that can create goodwill when we’ve reached

an impasse

 Obviously, though, there are other areas where we’ll be able to work

together

 I would still like to emphasize how much we appreciate our partnership

 Despite our differences of opinions, we are committed to a long-term

partnership

 Your support means a lot to us

Practice 1

Now, let’s practice some of what we have learned

First, imagine you are negotiating with a client Your talks have encountered an obstacle First, based on the cue, make a final offer Then the customer will express dissatisfaction Finally, you should reply by expressing regret

For example, if you hear:

Hold firm on this point <beep>

You can say something like:

That’s the best we can do We need to hold firm on this point

Then the client will reply with dissatisfaction, for example…

Face it We’re wasting our time <beep>

And you can respond by saying something like this:

I’m sorry to hear that you feel that way

Are you ready? Let’s give it a try

Exercise 1

Example cue 1: Cannot bend further <beep>

Example learner 1 – final offer:

Example client 1 – dissatisfaction: Frankly, we’re not satisfied with the offer

on the table <beep>

Example learner 1 – regret:

Now, let’s try it again

Exercise 2

Example cue 2: Already as far as we can move <beep>

Example learner 1 – final offer:

Example client 2 – dissatisfaction: Unless your side takes a different

approach, at this point I just don’t see any clear way forward <beep>

Example learner 1 – regret:

Great Now listen to the example answers

Answer 1

Example cue 1: Cannot bend further <beep>

Example learner 1 – final offer: That’s our final offer If we bend any further,

we won’t be making any money

Example client 1 – dissatisfaction: That’s just too rich for our blood We

seem to be wasting our time <beep>

Example learner 1 – regret: I’m sorry to hear that you put it that way

Answer 2

Example cue 2: Already as far as we can move <beep>

Example learner 2 – final offer: We’ve already made many concessions

That’s already as far as we can move on this point

Example client 2 – dissatisfaction: Unless your side takes a different

approach, at this point I just don’t see any clear way forward <beep>

Example learner 2 – regret: It’s too bad that we see things differently on this

issue

Practice 2

Okay, now let’s practice useful collocations You’ll hear a series of sentences with

a word blanked out or replaced with a beep Repeat the whole sentence, but say

the missing word

For example, if you hear…

We ran the <beep>, and we think their stock price is way overvalued

You will say:

We ran the numbers, and we think their stock price is way overvalued

We’ll play an example answer after each exercise Are you ready? Let’s begin

Cue 1: That’s way too <beep> for my blood

Learner 1:

Cue 2: We’ve reached an <beep> because we can’t agree on price

Learner 2:

Cue 3: There’s no two <beep> about it – we’re just going to have to accept the

deal

Learner 3:

Learner 4:

Cue 5: We should <beep> in the price of oil in our business plan

Learner 5:

Cue 6: High <beep> in the market makes it risky to put a value on a company

Learner 6:

Answer 1: That’s way too rich for my blood

Answer 2: We’ve reached an impasse because we can’t agree on price

Answer 3: There’s no two ways about it – we’re just going to have to accept

the deal

Answer 4: At this point, our need for cash outweighs the risk of taking out a loan Answer 5: We should factor in the price of oil in our business plan

Answer 6: High volatility in the market can makes it risky to put a value on a

company

That’s all for this episode We’ve looked at making and declining a final offer; expressing dissatisfaction and regret; and leaving the possibility open for further cooperation by maintaining goodwill We’ve focused on building good relationships even when things don’t go according to plan

Thanks for listening See you next time

Language Review

A Negotiation Dialog

Brenda and Mitch are both owners of mid-sized recycling companies Brenda is negotiating the sale of a business unit in her company to Mitch To review the skills and language practiced in this episode, put the following negotiation dialog

in order The first one has been done for you

After you have finished, identify the function of each phrase, i.e., stating your position, clarifying positions, giving reasons, evaluating positions, making a final offer, expressing dissatisfaction, or maintaining goodwill (There are two

examples of maintaining goodwill – all others are only represented by one dialog phrase.)

B Expressing Regret and Maintaining Goodwill

To review important language for expressing regret and maintaining goodwill, fill

in the blanks with words from the box:

1 I’m sorry to hear that you that way

2 It’s too bad that we things differently on this issue

3 Well, obviously this is _ for both sides

4 Obviously, though, there are other areas where we’ll be able to _ together

5 I would still like to _ how much we appreciate our _

6 Despite our differences of , we are to a _-term partnership

7 Your means a lot to us

Brenda: Frankly I must say that we have to be very firm on this

point

1 (Stating your position)

Mitch: That’s just too rich for our blood

Mitch: Well, if the number is 11 million, I think it’s really tough

to see where the value is for our side

Brenda: I’m sorry to hear that you put it that way

Brenda: That’s our final offer That’s already as far as we low

as we can go at this point

Mitch: Obviously, though, there are other areas where we’ll be

able to work together

Brenda: Yes, and let me be clear about my reason – as I’ve

said before, I don’t think you are putting a proper price on our

assets

Brenda: Yes, I agree I look forward to further discussions

Mitch: Okay, so as I see it, this is the position at the moment:

You can’t accept a penny less than 11 million, but we’re not will

to pay more than 10