Analysis - Lunch in Baltimore
• Medcorp approaches sixty-five year old Doctor about buying his practice for several million dollars (price TBD).
• Medcorp meets with Doctor, takes him to dinner, and feels him out with oral offers.
• Caution: If you are going to subject yourself to the “charm offensive,” be very cautious of wolves in sheep’s clothing. There is no one more charming than a cultured sociopath.
• Medcorp offers $3 million orally. Doctor says he was expecting $6 million.
• Error: Verbal leak by Doctor. The slightest hint of a number gives away far too much information at this stage of the courtship.
• Medcorp sends two spreadsheets indicating that they believe Doctor’s practice is worth $4.5 million.
• Error: Medcorp just bid against themselves. Given the scope of this transaction, this was a big move without rationale.
• Error: Never send spreadsheets without an executive summary to accompany them – Ziff’s Principle.
• Error: Medcorp has done little to determine Doctor’s interests. They would have a better chance of reaching a wise agreement with Doctor if they did that before making a proposal.
• Error: Spreadsheets are cold. Sending them by email is even colder. A Master would present them in person or, if that is not a viable option, with a phone call.
• Doctor developed his practice from nothing. He conducts research through it, which he loves. His wife and daughter work there. He has no particular plans for retirement.
• Note: These are important interests.
• Doctor has preliminary discussions with Medcorp, and then tells them that, if they are serious, he is turning it over to Negotiator.
• Negotiator makes contact and, attempting to establish rapport, suggests that since the representatives of both parties reside in Dallas, they schedule lunch for a “meet & greet.”
• Medcorp’s representative does not appreciate someone running interference for Doctor. He is hostile, defensive, and says, “If you want to have lunch with me, you can come to Baltimore, where our home office is located.”
• Error: lack of civility, and, to compound it, right out of the box. If you are going to insult someone, try to make a good first impression before you do; if someone likes you initially, they are more likely to overlook later transgressions.
• Error: failure to establish rapport. Masters know that rapport is the life blood of a negotiation. Without it, you might as well resort to rocks and sticks.
• Doctor is appropriately outraged and says he is done with these guys.
• Negotiator predicts that Medcorp will wait a few weeks and then attempt an end run around Negotiator.
• That comes to pass.
• In the interim, two people sue Doctor; another makes a claim; and he has the stress of physical pain and staff turnover.
• Note: leverage shifts.
• At a seminar they are both attending, Doctor meets with Medcorp without advising Negotiator and without any plan or agenda.
• Error: Doc goes rogue. He had correctly buffered himself with Negotiator. He did not remain consistent with his prior statements about the procedural aspects of the negotiation. Simply by meeting with them, he undermines Negotiator and shows weakness by his inconsistency.
• Error: impulsive decision making – meeting with no plan and no agenda and without consulting Negotiator.
At that meeting, they discuss the “lunch in Baltimore” incident; they discuss the criteria for evaluating his practice; and, they discuss a plan for going forward without Negotiator.
• Error: Doc lets Medcorp get away with bad faith tactics.
• Error: Doc naively demeans the status and role of Negotiator (two of the five “core emotional concerns”).
• Medcorp frames the lunch in Baltimore incident as a misunderstanding, and both parties move past it.
• Error: It was to Doctor’s advantage to press this point instead of glossing over it. When your counterpart makes an error, milk it.
• At one point, Doctor says, “I know how you guys play the game. If I want a dollar, I have to ask for two. I don’t intend to do that.”
• Error: Another verbal leak. This is a perfect example of why Herb Cohen advises us in “Negotiate This!” to never negotiate for ourselves. The primary reason: verbal leaks. There was no reason for Doctor to say this. He was just emoting. He should have been listening instead of talking.
• Error: Going to this meeting alone. Another excellent point that Herb makes is the value of a sidekick.
• He also says, “I am not going to meet with you again without my ‘business advisors’ being present.”
• Error: Another verbal leak, implying that he wants more face-to-face meetings but with his “business advisors” present.
• Error: He failed to consider that Negotiator may have advised him that further negotiations should occur without him present.
• Medcorp says that they understand that Doctor does not agree with their evaluation criteria and asks why. Doctor says that they have failed to consider income for his services after the sale. Medcorp says that they can fix this.
• Error: Doctor steps onto the slippery slope. He had an opportunity to question the premise of why their criteria should be considered as the basis for negotiations; his response implies that he accepts it but for a tweak. If that is not his intent, this miscommunication will likely muddy the negotiation waters.
• Even though they evaluated his practice before making their initial evaluations, Medcorp requests another on-site evaluation, meeting with Doctor, and additional information about his practice.
• Note: We could call this “grooming” or “building momentum.” Medcorp wants to keep Doctor engaged. They would especially like to close an agreement with him without Negotiator entirely, or, at least, with him marginalized.
• Doctor agrees that Medcorp can come to his location for another meeting with his lawyer but not Negotiator.
• Error: Doctor fails to support Negotiator. If Medcorp’s goal was to marginalize Negotiator, they have accomplished it.
• Error: Doctor has yet to receive a written offer! He should insist on an offer before investing more time and giving up additional information. By agreeing to another meeting without a formal offer, Doctor is showing weakness.
• Doctor makes no notes during or after the meeting.
• Error: A Master always makes good notes of a negotiation. This is more challenging than it sounds. If you are like I am and prefer to listen to people sometimes without making notes, make them immediately after that meeting. Not making them at all – what can I say?
• Doctor consults with Negotiator who makes these suggestions:
delay and regroup;
tell Medcorp that he has reflected and reevaluated and, again, wants Negotiator to handle it, as he previously stated; or
ignore Medcorp.
Predictions?