Biopharma Case Study

Many times negotiators describe their deals as “win-win” outcomes when the real “win” was leaving money on the table without even noticing due to lack of pre assessment and many other reasons such as ineffective BATNAS. On this case analysis essay we will illustrate how some negotiation techniques fail and why others don’t by using real negotiations examples occurred in class. We will show clear examples of how to “grow the pie” and then cut it to meet our interests and set an integrative agreement.

During the Biopharma case, the CFO made the first offer of $8 million workforce and $150 tax lien, he controlled the negotiation by doing this first move and asked for more than the actual need making the negotiation boundaries broader. This was a great opportunity to not leave money on the table since it sets high standards during the first move. From videos seen in class we learned that asking for more that you really need or want (using your target) really gives you a bigger and broad spectrum where you can negotiate without getting to the reservation point. The CFO did not settle for too little and he knew his BATNA. Effective preparation is a strategic advantage of any bargaining situation. In this case, his BATNA was $8 million for the plant with no patent, keeping the employees and the 150 tax lien. Overall, he also knew that the other party was a small company and that the plant ended in a $12 million value. In terms of context, there were some critical factors that affected the negotiation. The seller main goal was to sell Biotech plant fast and keep the workforce intact. This idea of keeping all employees in the plant has a key common factor or ground for both, making it easier to find a positive bargaining zone.

However, there was a tax lien cost that needed to be covered within the negotiation terms. The building was insured and the cost of making a new one was even higher, this was all information the buyer had access to making him having a great general idea when getting into the pre assessment phase. One of the critical factors was that Seltek had a higher target and it was possible for the deal to be unattainable. However, the tax lien amount to be covered gave the buyer room to play with the selling price.  According to Stanford Professor Maggie Neale it is critical that we as negotiators understand the other party interests so we can plan accordingly an offer that is attractive for both and know exactly what your options are before hand. The CFO knew this had this idea before hand by intuition and asked himself some questions before commencing negotiations.  It was possible to get to a positive bargaining zone where both parties met the idea that $8 million would be a quantity to consider when selling the plant. This negotiation was easy to complete since SELTEK wanted a fast selling option, there was no need to present multiple simultaneous offers or “Mesos”.