25-31 October 2000

EURO INFO In Focus: Vilhena Funds AGM "Assets under management in the Vilhena Funds SICAV plc. have increased by an impressive 42% from Lm36.19 million as at 30 June 1999 to Lm5l.58 million as at 30 June 2000. The number of shareholders has tipped the 3,500 mark." Chairman Dr Remigio Zammit Pace announced during Vilhena Funds’ Annual General Meeting. FEXCO Investment Services launched amid expanding industry FEXCO Investment Services (Malta) Limited was recently launched. The company has been licensed to conduct Investment Services business by the Malta Financial Services Centre. At a reception Finance Minister John Dalli welcomed this new initiative by FEXCO Investment Services (Malta) Limited.			Focus on negotiating 1 | 2 Continued from previous page Consider improving your Batna; be careful not to worsen it. Not only do Batnas define the minimum conditions for a deal but also enhance the ability to "walk away"', a factor often associated with negotiating influence. The better your Batna appears both to you and to the other party, the more credible your threat to walk away. Instead of further refining your tactics at the table, you should some times act away from the table to improve your Batna. Steve Holtzman, chief business officer for Millennium Pharmaceuticals, did a string of deals from the company's founding in 1998 to a value of $1.4bn. He said: "Whenever we feel there's a possibility of a deal with someone, we immediately call six other people. It drives you nuts, trying to juggle them all, but it win change the perception on the other side of the table, number one. Number two, it win change your self-perception. If you believe that there are other people who are interested, your bluff is no longer a bluff, it's real." Step four: solve the joint problem Here is your basic negotiation problem: by the choice of agreement or no agreement, how can you best advance the full set of your interests? The other party's problem is a mirror image of yours: by the choice of agreement or no agreement, how can they best advance the full set of their inter-ests? Since they will say yes for their reasons, not yours, agreement means joint problem-solving: addressing their problem as a means to solving your own. In this sense, effective negotiators are "selfish altruists". An associate of Rupert Murdoch remarked that, as a buyer, Murdoch "understands the seller - and, whatever the guy's trying to do, he crafts his offer that way. He is able to see what the person most wants out of the deal." Understand and shape how they see their basic negotiation problem. To change the other side's mind, you need to know their mind; "putting yourself in the other party's shoes" is venerable but good advice. Then, with them, you can try to build what Bill Ury calls a "golden bridge" from where they now are to where you want them to go. This is generally more promising than shoving them toward your destination. Tough negotiators sometimes dismiss the other side's concerns: "That's their problem. Let them handle it." This attitude can undercut your capacity to influence their problem, as they see it, in your interest. Early in a career of making deeds at Cisco Systems, Mike Volpi's "outward confidence" was mistaken for arrogance and he had trouble completing proposed deals. Many acquisitions later, a colleague said "The most important part of [Volpi's] development is that he learned power doesn't come from telling people you are powerful. He went from being a guy driving the deal from his side of the table to the guy who understood the deal from the other side." Even in tough dealings, this per-spective is useful. A multinational company was enraged in a con-tentious, highly publicised negotia-tion with a shareholder and joint venture partner. Despite a reputation of near invincibility, research revealed he had not in fact "won" all such battles but had an acute interest in maintaining that perception. The multinational firm therefore offered a deal that kept the essential substance for itself but gave the shareholder the appearance of victory (while making sure the shareholder saw his Batna as a very public loss). Even where the issue is economic, finding differences can break a deadlock. A small technology company and its investors, demanding a high price, were stuck in negotiation with a large strategic acquirer that was adamant about paying much less. The acquirer was willing to pay the asking price, but was very concerned about sharply raising price expectations in a fast-moving industry sector where it planned to make more acquisitions. The solution was for the two sides to agree a modest cash purchase price initially, which was widely publicised, with complex contingencies that virtually guaranteed a higher price later. To solve the joint problem, employ a "3D" approach, including actions "away from the table". "One dimensional" negotiation is the most familiar image: an interpersonal process involving, persuasion, cultural sensitivity, crafting offers and so on. Two dimensional negotiation moves from interpersonal process to the substance of value creation: "deal crafting,' or the logic of devising and structuring agreements that create sustainable' value. Yet these two dimensions are limited: when the parties engage in a face-to-face process of creating and claiming value over a given agenda, much of the me is cast. The best negotiators play a wider, 3D game. With the potential value to be created as their guiding beacon, they act as entrepreneurs. They envision the most promising architecture and act, often away from the table, to effect it. They get the right parties to the table, in the right order, to deal with the right issues, at the right time, by the right process, and facing the right Batnas. 3D negotiators play the game as given, they are masters at setting it up and changing it to maximise the results. In summary, seeing negotiation as 3D joint problem is a reminder that solving the other party's problem is very much part of solving your own. Having done a deal diagram and having assessed the 'full set of interests and Batnas, your strategy is to shape how they see their basic problem such that, for their reasons, they choose what you want. The goal is to create and claim sustainable value. Superb deal makers instinctively understand Francois de Calliéres, an 18th century commentator, when he described a negotiation master as possessing "the supreme art of making every man offer him as a gift that which it was his chief design to secure".

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Editor: Saviour Balzan
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