A few years ago I read
an interesting article based on the work of a renowned US business school which
gave the results of studies into acquisitions and mergers in international
business over a period of years. The conclusion, briefly summarised, was
that what these deals produced in practice was a long way short of what had
been predicted for them at the outset – fewer, than a third of deals met the
expectations which had been heralded for them when they were being contemplated
and shareholders were being convinced to endorse them. It is interesting
that some of Scotwork’s emerging research into negotiating behaviours (we will
be saying more about this in the months to come) indicates that untrained
negotiators don’t see the negotiating process as adding a great deal of long
term business value or as strengthening relationships. It seems the
process is just a necessary evil to many who have to carry it out.
Trained negotiators, however, seem to have a different view.
I was put in mind of these things when I read a brief article recently in
The Times newspaper. It concerned a deal done between two football clubs:
Monaco and Manchester United (I declare an interest here, I am a passionate and
very long term supporter of the latter team). The deal concerned a young
player, Anthony Martial who was transferred to Manchester United from Monaco in
2015. The deal, for a reported fee of €80 million, was the largest ever
for a teenage footballer- Martial was nineteen years old at the time.
Other details of the deal have, however, been leaked and include some
interesting features. If Martial scores 25 goals in competitive matches
for Manchester United, Monaco will be entitled to a payment of €10
million. Moreover if he is shortlisted for the Ballon d’Or (the soccer
equivalent of the Oscars) then a further €10 million is due to Monaco.
If, however, Martial achieves neither of these desirable targets then
Manchester United could sell the player, but if he is sold before 2018 for a
figure between €60 million and €100 million, than Monaco will earn 50% of the
profit which Manchester United make.
This intrigued me: how clever were the Monaco negotiators to recognise the
importance of such a player to the Manchester club and to future-proof the deal
when they recognised that they would not be able to keep their young asset for
themselves? All negotiated deals necessarily involve an element of risk –
we change the status quo in the belief at the time that we will benefit from
the negotiated change. However, it may be a good lesson for us all to
learn from the Monegasque negotiators that the deal we do can include a
component to minimise the risk associated with the deal. Of course, none
of us know the compromises which took place to get the deal through on the €80
million price in the first place but thinking creatively about how many
elements you can include in your deals and recognising that you can trade
against future events and benefit from them is genuinely creative.
Me? I just wish Anthony Martial was scoring enough goals to put that €10
million payment in danger!
David Bannister- Scotwork, UK
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