Samples Business Capital Mortgage Corporation Case Analysis

Capital Mortgage Corporation Case Analysis

935 words 4 page(s)

Question One
Negotiation is a process that involves entities agreeing, not necessarily to their complete satisfaction. Sometimes being a give and take operation, negotiators are supposed to be prepared appropriately (Gates 45). However, this is not the case in this negotiation, as it appears that capital mortgage was not adequately prepared for this activity. For instance, one of the negotiators [Randall] did not know how to communicate accurately to burr to an extent that it seemed as a waste of time. They were putting burr off for so long and Randall concentrated more on conducing face-to-face meeting instead of the terms.
The meeting also highlighted the lack of prior business research because the negotiators did not even know the exact value of the business they wanted to acquire though they had been given some financial statements to work upon. The mortgage firm had taken too much time before the formal meeting yet Randall and his colleagues did not have a definitive negotiation stand and communication with the counterparts was characterized by ambiguities and postponements, of which, shows lack of preparedness for this undertaking.

Question Two
Based on the offer of 400,000, it is possible that corporate transfer services may consider the offer being undervalued based on their current holdings, value, and market share. If the negotiators cannot estimate their exact value based on available financial information, records in the public domain, and market research findings, they conclude that capital mortgage is not adequately informed about their business. The inability for one of the negotiators to make it to the meeting is another indicator of lack of seriousness and poor performance of due diligence beforehand.

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Question Three
The response from corporate transfer was indicative of disappointment once the offer was given in terms of goodwill and reputation of the company. Valuing the company in terms of these elements rather than its financial data, performance, market share, and value addition to the mortgage company was an undervaluation that caused some disappointment. It was an expected reaction since another related company had been sold at a higher price and capital mortgage insurance was not aware of such developments to adjust the pricing accordingly.

Question Four
Capital mortgage insurance is supposed to adjust its negotiation strategy and approach to the valuation of the company in order to make a good counter offer. The expected amount is 5 million, and it is too high from the 400,000 initial offer. As such, the company should recompute the valuation amount, ask for more information from corporate transfer service, and ensure that every person is involved in the negotiation due to the importance of the business deal being sought. This is the best set of actions to correct the negotiation mistakes that had been done at the beginning of the negotiation.

Question Five
What had happened is that corporate transfer took the offer from a disappointment perspective and capital mortgage considered the counter offer ridiculous. As such, the parties had to explain the conditions of the deal and how the proposition of 5 million had been computed. Every item was elaborated and in the process winder mentioned that the valuation of 5 million was based on the sale of another employee relocation company, whose, 60% had been sold for 3 million dollars. According to McCarthy and Hay (67), the rationale for such events was to clarify the terms under negotiation and allow the parties to reconsider their offerings.

Question Six
Randal and Dolan should take the adjusted amount and compare it to their estimated value. If within their expected limits, then they can proceed with the negotiation.

Question Seven
The corporate transfer should, on the other hand, listen to Randall and Dolan for their offer and establish its practicality in the situation. They should insist to hear the counter offer from Randall and if they needed, any additional assistance.

Question Eight
Capital mortgage should reconsider its offer and reformulate an appropriate negotiation strategy to make a corporate transfer to reduce its offer of 2.5 million. It should also adjust the terms of the agreement to try to push down the price.

Question Nine
The strategy of deliberately being noncommittal is not effective and can be interpreted as demeaning to corporate transfer services. Not receiving calls and telling burr that he will know at a later time because Randall and his colleague could not make time for a meeting appears derogatory and implies that burr is desperate to sell the company. The judgment is that this is a risky approach and there is a higher chance of failure.

Question Ten
Capital mortgage should become clear in communication, show some modesty by replying to burr, and stop being arrogant. This is not a good negotiation technique as explained by Gates (80) and Vachon (132) since corporate transfer may seek other buyers with better terms; therefore, Randall and his colleagues should make appropriate considerations and reply accordingly.

Question Eleven
As per the negotiation case, there are various aspects that need consideration and their application act as good lessons in the field of business negotiations. Good preparation, attention to timing, business valuation techniques, accurate communication, and anticipation to make compromise are the core aspects highlighted in the whole process. Additionally, closing with an elaborate and clear confirmation is another critical negotiation aspect that makes every party informed of the progress and available options. This element has been missed from the beginning of the negotiation where Randall used ambiguous communication, inconclusive statements, and always kept burr misinformed.

    References
  • Gates, Steve. The Negotiation Book: Your Definitive Guide to Successful Negotiating. 2nd ed., John Wiley & Sons Inc, 2016.
  • McCarthy, Alan, and Steve Hay. Advanced Negotiation Techniques. Springer, 2015.
  • Vachon, Dana. Mergers & Acquisitions. Riverhead Books, 2008.