Creating Value in Deals. Randy Richards St. Ambrose University. What is a deal?. A voluntary economic arrangement between two or more parties includes: Business ventures International treaties Marriages Buying and selling Mutually beneficial arrangements
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St. Ambrose University
Seller reservation price = 200,000
Buyer reservation price = 250,000
Zone of Possible Agreement (ZOPA)
Zero Sum – The more the seller gets, the less for the buyer; vice versa
ZOPA – the overlap of acceptable solutions, the settlement range
BATNA – the best alternative to a negotiated agreement, find a different buyer, find a different flat
The belief that any agreement will result in a gain for one party means a loss for the other party.
Leads to a party seeking to maximize his/her outcome at the expense of the other party.
If the pie can’t be made any bigger then any piece I get means you get less and any piece you get means I get less.
Discovering interests – shared, different
Reducing the costs of the dispute
Changing the timing
Predicting different futures
Accepting different risk profiles
Grow and then divide
Different relative values
Different expectations about future
Different risk preferences
Different time preferences
Can we speed this up?
Can we slow this down?
Can we start earlier or later?
Can we end later or earlier?
Can we delay until . . .?
Can we change the sequences?