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Prof Gavin Kilduff

Negotiations and Consensus Building

Anurag Rakshit

19 April 2017

Post-Negotiation Analysis for Texoil Case.

For this negotiation exercise, I played the role of the Station Owner. I think the

negotiation outcome was generally positive and provided me with a lot of valuable insights about

the importance of emotional appeals in a negotiation dialogue. The sale of the station was agreed

upon at a maximum negotiated price of $500,000 pre tax. Texoil has also agreed to pay a 10%

royalty fee on all their sales at the service station and the mini mart for the first two years.

However maximum compensation arising from this deal is capped at US 100,000. Even though

the goal was to achieve a sale amount of $553,000, I believe that with due to Kevins hard

negotiation tactics and given my urgent need to conduct the sale of the station, it is a satisfactory

amount as it is still way over my BATNA which is $400,000. Plus, the added royalty fees should

also allow me to get closer to my goal amount, while retaining a small amount of future cash

flow.

My initial strategy was to not hold an aggressive stance since I my spouse was having

medical issues and my need to sell the property soon superseded my need to make significant a

profit at the cost of bluffingwhich would increase the risk of having Texoil walk away from
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the table. Based on this, I started off by explaining why I needed to sell the property prior to

engaging in

negotiating any particular terms. Kevin, who was playing the Texoil representative, was very

astute in assessing my weakness and indicated that he might use that to his advantage. I decided

to build rapport with him first, so that a personal relationship would make it harder for him to

present me with a lowball offer. We spent a good portion of the time just talking about the

business and what me and my spouse would do after retirement, while I tried to capture his

sympathy by stressing on our dire need to take a break from the Gas Station business. He showed

positive signs of sympathy towards my situation and proceeded to explain to me his plans on

building a mini mart on the property to maximize their profit potential.

After this we went on to begin the actual negotiations. Kevin went first by offering me

and my spouse a sum of $400,000. This was a surprise to me since I thought we were on the

same page about the valuation of the property and its future profit potential in the area, however I

chose not to overreact to this offer and try to understand why he chose the figure so that I can

understand his reservations about what the appropriate price should be. Based on the discussion

that followedI deduced that this is because his reservation price is lower than what I might

have been expecting and the number itself is simply an arbitrary offer motivated by the need to

report a successful deal to his higher ups at Texoil. This inference made me reveal that we had a

alternative offer at the table but also state clearly that due to our existing relationship we are

much more inclined to sell the station to Texoil, instead of an outside party. This resulted in a

significant rise in his offer to $500,000. While a big jump from the initial amount, this was still
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lower than my goal of $553,000, so I expressed my concern and proceeded to counter his offer.

But before I could name an alternative price he indicated that he was not willing to go north of

the $500,000 figure adamantly. This caused me to switch strategies and ask for some other form

of compensation instead, which in my case was royalties from the future sale of goods at the

station. He seemed interested in the idea and we both arrived at a final number of 10% in royalty

fees over two years with a cap at $100,000. At this point I saw no further room to negotiated and

decided to shake hands on the deal. Before we signed the agreement, Kevin also insisted that I

sign a Non-disclosure Agreement about the terms of our deal as he was worried that other

perspective business partners could potentially use the information to their advantage. I was

happy to sign the document.

In the end, what I really learned from this exercise was that revealing your personal

disadvantage allows the other party to build trust and rapport, and it paves the way for a

healthier, much forthcoming negotiations.