Live Nation and Ticketmaster Merger
Chief Negotiators in Each Side and Strategies
In the discussion regarding Live Nation and Ticketmaster merger, the chief negotiators were the boards of directors of these two companies. The original position of the direction of Ticketmaster was built on the proposition for both companies to join together their data centers, marketing facilities, offices, and ticketing operations. In addition, Ticketmaster wanted the company shareholders to receive 1.5 shares of common stock of Live Nation for every Ticketmaster share they had. The company also required its partners to own about 40% of the merged company (Smith, 2009). While the position of the board of directors of Live Nation was also to join together all their resources already mentioned above, it demanded that the shareholders of Ticketmaster receive 1.2 shares of common stock of Live Nation for every Ticketmaster share they had; the partners had to own 60% of the combined organization property (Smith, 2009).
Strategies Employed by Live Nation and Ticketmaster
Both Live Nation and Ticketmaster employed the integrative negotiation strategy to create terms and conditions that they have established. The two parties agreed to combine the elements that each of them had proposed in order to present a larger acceptable aspect of the negotiation. Since the companies had partnered before and completed the partnership agreement without unpleasant occasions, the integrative approach worked well for them. This technique of negotiating is appropriate when past relationships of the sides have been good. The two companies, thus, utilized satisfactory relationship they have had in the past to gain the greatest value from the negotiation. However, they aimed at identifying the conditions that ensure that both of them benefit from the agreement with regard to meeting their goals. To achieve them due to negotiation process, the parties must exchange ideas and information they consider prudent for it.
The two organizations followed the steps required for a negotiation to be successful, which include preparing for process, building rapport, collecting information, making deal, and closing negotiation. The two parties saw a need to confer before starting the negotiation process itself. The boards of directors decided to share resources and gain a competitive advantage in the industry. Thus, they chose to begin the merging process. They embarked initiated the conduction of research regarding potential benefits and drawbacks of the merger and found that it will benefit both the clients and the merged company. When the boards of directors have met for the negotiation, they built rapport by agreeing to work towards reaching results that could mutually profit both parties. According to Wheeler (2013), building rapport when beginning negotiation enables the parties to respect and trust each other as well as welcome the arguments that they make.
The two organizations, thereafter, presented their offers, each starting with what it believed was better for the combined company and clients at large. Each partner provided it Best Alternative to a Negotiated Agreement (BATNA). With the BATNAs, the board of directors of Live Nation met separately to internalize and discuss the proposal, which Ticketmaster brought. The directorate of Ticketmaster also held separate meetings to establish its position with regard to the offer, which Live Nation provided. When the boards of directors of the two companies met again, they signed the agreement, according to which the shareholders of Ticketmaster receive 1.384% of shares of the common stock of Live Nation for every share of Ticketmaster they had, and they also get 50% of the joint company (Kreps, 2009, para. 2).
Tactics Employed by Live Nation and Ticketmaster
Live Nation utilized low-balling, silence, and bait-and-switch tactics while negotiating the merger. It started the negotiation by providing an offer to join together data centers, marketing possibilities, offices, and ticketing operations, which they knew would not be contentious. Since Live Nation was aware that Ticketmaster would concede the offer, it strategically decided that the other party would begin with providing its proposal concerning the most controversial issues; that fact provided it with the opportunity to know Ticketmaster opening offer regarding contentious aspects of the deal such as shareholders’ stock and ownership of the combined company. Even thought Ticketmaster agreed to the first offer, which Live Nation provided, it inquired into any hidden costs and benefits that might come along with that offer. Gates (2016) indicates that probing hidden agendas of an offer during negotiation process enables a party to avoid paying more for an item under negotiation.
Live Nation also was continuously employing silence in the negotiation process. While the company board of directors did not specifically keep quiet during organization of the deal, it restated the offers for their counterparts to reconsider them and agree with their point of view. This method was aimed at making the other party to concede. Lastly, Live Nation used bait-and-switch tactic. Just as it was mentioned above, the company attracted the interest of Ticketmaster board of directors by starting with a good offer to join together their data centers, marketing facilities, offices, and ticketing operations, which it knew could be easily accepted. The tactic worked well for it since the company was able to make Ticketmaster to provide its interests in the second offer. Since the first idea seemed lucrative to Ticketmaster, the business simply decided to accept it and indicate its second condition. The second statement that Ticketmaster provided made Live Nation to weigh what it wanted and provide a condition, which was slightly higher.
Similarly, Ticketmaster used low-balling and bait-and-switch tactics during the negotiation but also it utilized the written word to boost two mentioned tactics. The company began discussion with a low offer to entice the board of directors of Live Nation. Thereafter, it introduced certain conditions, which made the deal to be sealed at 50% (Kreps, 2009, para. 2). Regarding the written word tactic, the company drafted an offer, which it constantly referred to during the negotiation process. It had the intention of making the other party to believe that its written proposal would not be negotiated. The tactic did not work well for Ticketmaster since it finished not fully agreeing with the offer in the document. The written agreement was not even a priority of Live Nation even though the company read it. Apart from the condition to join together their data centers, marketing resources, offices, and ticketing operations, the rest of the proposals that Ticketmaster’s has included into the written document were not accepted. Instead, they were modified to suit the interests and wants of both companies. It is important to note that a new written document, which indicated the final agreement between the two companies, was made and signed by their CEOs.
Strategies and Tactics My Group Would Use
To achieve the desired outcome, my group would use several steps: it would prepare for the negotiation, build rapport, collect the information, make deal, and close the negotiation. We would identify the need for the latter, which would be to gain profit, expand market share or improve capital condition. We would then create a positive relationship between two organizations while conducting useful research to identify what each one of us would benefit from and loose after the merger. The positive relationship will make every party feel comfortable even if they try to strike a workable and sustainable deal. In this regard, we would identify our aspiration level, reservation price, opening offer as well as bargaining and settlement zones although we would not expose the latter zone to the other party earlier in the negation process. The group would make the initial bid to situate the tone of the arbitration. Once we make it, the other party might find it difficult to offer a proposal that is too high or too low to as compared to our initial offer. The first offer is the foundation, upon which the other party should strive to attain. Since this offer may not be acceptable to many negotiators, we would set it above or below our aspiration level to provide space for scheming.
The strategy we would use is the red herring one. Red herring involves the use of minor matters to divert the other party during the negotiation process. We would, thus, insist on the fact that the other party addresses the minor matter before we can move to more serious issues. The minor aspects to be used would be related to the merger though. For instance, when discussing the stakeholders’ ownership of the company, we would introduce a minor issue such as a team to be incorporated into the board of directors of the proposed merged company drawn from either side. It would be done with the intention to make the other party get involved in what is not very important to the negotiation and, eventually, agree with our requests when the time for discussing crucial issues comes. In case the partner insists that we should talk about certain aspect later, we would utilize the silence tactic by either keeping quiet for the other party to respond or agree with our suggestion or continue restating the issue. Since silence in a negotiation may create deadlock, the other party may see the need to respond with a better offer.