Business and Management
Submitted By kssarvind
Arvind Korkadu Sucharitha Sridhar
Group Project Written Assignment
Our Team, 3A, played the role of Winemaster, an online vendor of mid-range European and Californian wines, who was interested in a potential sale of our company to Homebase, an internet based food distribution company. The reason for this potential sale is “direct shipment” law which makes other wine vendors to make sales in Rhode Island.
Winemaster had three other option for selling our company other than Homebase. It had been assumed that many of the preliminary negotiations had already been completed regarding a competitive salary, benefits, etc. Our job was to reach a negotiation with WineMaster on the following four components: 1) Stock, 2) Vesting period, 3) Board seat, 4) Pending lawsuit liability.
First off, our team 3A discussed what should be our strategy to make our selling successful, a price above what was otherwise available to us from other potential companies. In other words, we had decide what our BATNA was and it was $6 million. If we could keep the selling price above this, we felt we were successful in our negotiation.
We created a table that allowed us to evaluate with various scenarios. For example considering a stock price at $50 per share, how much share should be bought at pro rata? What will be the value of a Board Seat? Who will take care of the law suit against Winemaster? In all of our scenarios, there was a high possibility we would hit a price above $6 Million. We took this information as a good sign.
When we began our actual negotiation with the Homebase, both teams came to an assessment of the current Homebase stock value. We started the negotiation with the vesting of stocks. We wanted immediate vesting of the stocks, and Homebase wanted long term vesting. They taught immediate vesting would make us walk away from Homebase after the stocks are...