Post on 17-Jan-2015
description
Setting The Table: Preparing for Licensing Negotiations
John Buckingham MaRS Best Practices Series April 14, 2010
What to do before…
Today’s Objectives
Understand what `good’ preparation for negotiations looks like
Consider approaches to enhance effectiveness and efficiency of your efforts to prepare
Identify resources for additional information
Negotiation Perspectives
Group Input
What should you do, before starting formal negotiations?
Key Elements of Thorough Preparation
Conduct `Due Diligence’ Investigation of Potential Partner Prepare Negotiation `Playbook’ Shape Negotiating Environment Select and Prepare Negotiation Team
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
What is their strategic focus? Are they financially sound? Check conduct/outcomes of current and past partnerships:
Reference sources: Press releases, SEC filings, ReCAP, Windhover, etc.
Personal networking (adhering to confidentiality requirements)
Use technical due diligence activities collect relevant information from prospective partner staff
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Prepare Negotiation `Playbook’:
Some Key Principles: Focus on interests, not positions (of both parties) Identify/create options likely to satisfy both parties
Due Diligence Playbook Environment Negotiation Team
Reference: `Getting to Yes’, R. Fisher, W. Ury & B. Patton,
2nd Ed. (1991), Houghton Mifflin Co.
Key Elements of Thorough Preparation
Seven Key Elements : Interests Options Alternatives Legitimacy Communication Relationship Commitment
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Interests Determine what you need or care about
Strive for alignment with company stakeholders regarding `what’ and `to what degree’, for key interests
Anticipate the business interests of the potential partner and the personal interests, relevant to the negotiation, of their negotiating team
Due Diligence Playbook Environment Negotiation Team
Strategic Importance Potential Partner
Stra
tegi
c Im
porta
nce
to Y
our C
ompa
ny
Low High
Low
High
Imbalance Balance
Balance Imbalance
Alliance Structure and Management Considerations
Vulnerable Enthusiast
Potential Bully
Dynamic Duo
Simple Pairing
Key Elements of Thorough Preparation
Options Identify potential ways in which greater value could
be created, i.e. `increasing the size of the pie’ Develop alternative ways to satisfy your interests
and to solve anticipated problems in the negotiation
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Alternatives
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Alternatives
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Alternatives BATNA
Best Alternative To Negotiated Agreement May include:
Other potential partner(s) Continuing independent development Merger or partnership alternatives Other creative options
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Legitimacy Prepare supporting rationales for your key goals:
Industry benchmarks Precedents Accepted Principles
Supports `fairness’ of your view Provides other team with `fairness’ arguments for their
stakeholders
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Communication Plan for effective communication of your key
interests (to ensure these are heard properly by partner)
Anticipate what you expect to hear from partner regarding their key interests (so you can be more alert to new information)
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Relationship Keep in mind that the relationship tone during
negotiations carries forward into a future relationship
Plan for a constructive, joint problem-solving approach, rather than a win/lose mindset
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Commitment Think through what `done’ means
Identify the activities and/or level of performance you will need from your potential partner, to properly address your interests
What `consequences’ are appropriate to negotiate, to better ensure your partner will perform as planned?
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Shaping Environment Creating positive `buzz’ about your offering Use of public statements to reinforce key interests Recruiting/developing influential champions Identifying and developing `back channels’
Due Diligence Playbook Environment Negotiation Team
Key Elements of Thorough Preparation
Selecting and Preparing the Negotiation Team Determine who will represent potential partner Designate negotiation leader Define roles of other team members Review key elements of Playbook with team Establish guidelines for confidentiality
Due Diligence Playbook Environment Negotiation Team
`Emergency` Preparation
Focus On: Interests Options Alternatives Legitimacy
Resources
Professional Associations: Licensing Executives Society (USA & Canada) – Toronto Chapter
www.lesusacanada.org Canadian Healthcare Licensing Association
www.chlassoc.ca
Courses: Harvard Business School:`The Program on Negotiation for Senior
Executives’ www.pon.harvard.edu/category/courses-and-training/
Stitt Feld Handy Group: Negotiation Workshops (Canada) www.sfhgroup.com/ca/training/negotiation/
Today’s Objectives
Understand what `good’ preparation for negotiations looks like
Consider approaches to enhance effectiveness and efficiency of your efforts to prepare
Identify resources for additional information
Questions?
Setting The Table: Preparing for Licensing Negotiations
John Buckingham MaRS Best Practices Series April 14, 2010