Negotiating Strategies in Finance Simulation Role-Play

1 Simulation Role-Play. Student’s Name Affiliation Author’s Note

2 Simulation Role-Play. 1. What was your primary and secondary goal? How did you plan to achieve them? Finance simulation for Celanese and Blackstone was a hands-on educational exercise. The dynamic simulation is based on Blackstone's acquisition of Celanese under negotiations in 2003. I assumed on the character of Blackstone, who had to deal with Celanese. All through simulation, each business must undertake due diligence, devise transaction parameters, create and react in agreeing or disagreeing to proposals and counter-bids, and consider the wants and needs of their business's and the competing firm's shareholders. The other essential learning goal is to develop a merger and acquisition approach that benefits both organizations. 2. How and why did you change your valuation during the negotiation? Negotiation starts when I, as Blackstone, design a bid to acquire Celanese. We have the option of negotiating face-to-face or using the simulation's chat feature. When it comes to negotiating, both parties can utilize the simulation's chatting tool to interact with one another and reach an agreement (Timothy et al., 2009) . The finance portion of the simulator is primarily concerned with evaluating both businesses through the analysis of financial model and reports presented in the simulation. Cash stream approaches of each company's liquidity and capital, as well as LBO forms, are some instances. In the Blackstone role I played, I have the capacity to establish a bargain that fits the goals of the company's investments board, but the other colleague in the Celanese function wants to maximize shareholder value while protecting the interests of other shareholders. When we reach a deal, we solicit permission from the participants on both sides of the transaction (Ken et al., 2012). As a venture capital business, my Blackstone role must be approved by the Blackstone

3 Finance Committee. Blackstone's financial obligations must be approved by the financial institutions. Stock values fluctuate in connection to the formalized bidding procedure, simulating the stock economy's reaction to proposed acquisitions and mergers. Stock price variations have a significant impact on the valuation of a suggested transaction, and as players, we must evaluate how bargaining activities influences share values. The Celanese leadership team, stockholders, and executive committee are also shareholders. Disputes of interests are unavoidable when there are so many parties (Timothy et al., 2009) . If the arrangement is declined, we must re-negotiate until a satisfactory agreement is obtained. There is an analyze bar that contains all of the important financial facts before reaching decision on negotiations which utilizes the decisions bar. In essence, the simulation informs me that I am Blackstone and also that my reserve rate bid to Celanese demands an intrinsic rate of return, as determined by Blackstone's Advisory Board (Timothy et al., 2009) . It also specifies that Celanese is a public business, thus I, like Blackstone, must make a bid for its share value. 3. To what extent did you address the needs of the other players? When dealing with such deals that require the participation of stakeholders and partners, I had to address specific needs while ensuring that none of the parties benefited. Some of the needs I have had to address in order to encourage the other significant participants are as follows: o The stock price gave a reasonable premium. o Celanese getting a pension offered. o Recognize the needs and desires of the dissenting personnel, who requested upfront funding for their pension scheme as part of the settlement. o Offering Celanese a solid stock option. o Attempting to accommodate for Celanese's value-creation cost structures.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 4. What would you do differently next time? In my capacity as a Blackstone role simulator, I attempt to enhance simulation and evaluation. I should have made more effort to evaluate accounting information, adjust a few of the figures and amounts, and request additional due diligence documentation (Timothy et al., 2009) . All of this could have been done sooner, but in the end, I learned from my errors and understood the value of correct valuation, which I may consider implementing in the future. After our first offer was denied by Celanese, my position in Blackstone's negotiation strategy was centered on the necessity of cash and pensions, a reasonable stock value, and, very importantly, an average sale price for both pension plan and stocks that would have been fair for both of us (Blackstone and Celanese) (Ken et al., 2012). Finally, the arrangement that Blackstone and Celanese reached through talks did, in reality, produce benefit for Blackstone shareholders, making Blackstone successful and profitable now and for the foreseeable future.

5 References. El-Hage, Nabil N., Timothy A,. (2009). "Finance Simulation: Blackstone/Celanese: No. 3712." Simulation and Teaching Note. Watertown, MA: Harvard Business Publishing. Ken, F, Kasturi, R, Evan H,. (2012). “Strategy: An Executive’s Definition”. Strategy + Business Magazine.

simulation

Related Documents