A Negotiation Expert Shares Tactics from Elon Musk’s Twitter Deal Every Entrepreneur Should Know

Opinions expressed by Entrepreneur the collaborators are his.

Elon Musk’s Twitter takeover bid has caused quite a stir in recent weeks. On April 25, Twitter agreed to sell the social media platform to Musk after reaching an agreement for the billionaire to acquire the company and take it private. While Musk made several compelling claims to prioritize free speech, open source algorithms, remove spam, and add new features, the vision was not the only thing Musk used to persuade the board and means. Musk and Twitter used a variety of proven and true negotiation tactics that all business owners should consider when negotiating their next deal with the customer.

The best and definitive offer. Was it true or just a negotiation tactic?

On April 14, Musk offered to buy the entire company. In the SEC filing and an accompanying tweet, Musk announced his plan to buy shareholders in a $ 43 billion cash deal and leave Twitter private. Musk described this as his best and last offer.

When you hear “the best and final bid,” most people would assume that this represents the final bid that will be made in a negotiation or bidding process. This phrase is often used to take it or leave it and to push the deal. However, one thing to keep in mind is that you cannot withdraw your offer.

Read more: What other CEOs can learn from Elon Musk’s aggressive and unorthodox takeover of Twitter

The defense of the “poison pill”.

In an attempt to avoid the acquisition of Musk, Twitter launched a “poison pill”, which is a rights plan that allows shareholders to buy shares at a discount if any shareholder exceeds 15% of ownership. This would eventually dilute Musk’s involvement.

Defending the poison pill is a maneuver that makes a company less attractive or desirable for a potential acquirer. It is a common tactic to avoid a potentially hostile or unsolicited attempted takeover. In the case of Twitter, it was about protecting shareholders. Another notable defense against poison pills includes Netflix’s attempt to defend himself against Carl Icahn in 2012.

Employers should be aware of the pros and cons of a poison pill defense. While it is very effective to deter an acquirer, this is often just the beginning of a defense strategy. Poison pills will not necessarily prevent the acquisition of the corporation if the acquirer is persistent, and we all know that persistence is a big persuasive factor. In addition, tactics can also weaken your business if used incorrectly.

Read more: 8 negotiation tactics that all successful entrepreneurs have mastered

Reconsidering your position

Prior to announcing his intentions to buy Twitter, Musk was an active investor on Twitter and silently bought shares in January. By mid-March, Musk had accumulated more than a 5% stake in the company. In April, Twitter invited Musk to join the board. Musk turned down the offer to join the Twitter board on the day he was expected to officially join. Without a seat on the board, Musk no longer had to act in the best interests of Twitter shareholders. There must have been some play during that time. Why talk about a board seat when you had a clear intention to buy the whole company?

Reconsidering a position is part of the negotiation. The best negotiators write down their highest goals while dynamically reviewing the new information as it arrives and then adjusting their position and strategy accordingly. It is impossible to know what was going on in Musk’s mind, but there are many factors that are constantly changing in this takeover bid, from other potential suitors, to his conversations with the board, to Musk’s ability to get funding, even a volatile market (especially within technology), and more. The key is to be prepared before entering the heat of the negotiation so that any adjustments you make to your offers and strategies are the result of adjustments to new information rather than feeling more pressure to reach an agreement, which is often the case. we mean. to treat fever.

Read more: Elon Musk will stop paying Twitter board members if he buys the business


On April 21, Musk explored a public offering for Twitter with $ 46.5 billion secured in funding. Negotiations began on April 24 when Musk presented the financial details. Talking about finances is an important part of the negotiation process and can take a long time to reach a mutual agreement.

One thing to keep in mind as an entrepreneur is that financial negotiation is considered a leverage tactic. Leverage is the power that one party has in one negotiation to influence the other to get closer to their negotiating position. Gaining leverage is one aspect that can lead to winning a negotiation. You may be wondering, “How can I gain influence in a negotiation” or “What is the value?”

Leverage is the advantage you gain as a result of an act you commit and / or a position in which the other negotiator finds himself as a result of that action. Think about how you were able to get leverage (that is, the opposing negotiator reporting a false statement), what you will do with your leverage, and how you will regain leverage if you lose it. Negotiations are a constant ebb and flow, so positional power can change between negotiators. Always consider the other negotiator and what they bring to the table: what stimuli will influence him. Most importantly, communicate confidently. When one seeks to seize power, a statement made with certainty may be more credible than a truthful sentiment said with doubt.

Read more: FBI Negotiation Tactics You Can Use to Get What You Need

Source link

Leave a Reply