Negotiation (David M Dodson case)

SEQ CHAPTER \h \r 1 Name

Date

Class

David Dodson - Effective negotiation for a large-scale company

David Dodson , president of Falcon Capital Corporation , pursued an acquisition with Auto Palace , a subsidiary of Rite Aid in 1995 . Having graduated from Stanford Business school in 1987 , Dodson began work with a 17 million acquisition with Smith Alarm Systems in Dallas . After being sold in 1994 , Dodson began looking for new work

After pursuing the Auto Palace acquisition for nearly two months , many felt the sale would be a race ' among all the

bidders . He sincerely thought that Rite Aid was trying to hold up his progress and worked diligently to earn meetings with management . He was told there were up to 3 serious bidders

First of all , they were wary of how he would finance his acquisition He had potential equity investors from Falcon - however , definite Peter Bartlett , the investment banker , that worked with Dodson to organize the financial issues , felt that was a big concern for ADAP . He felt it would be unlikely for Dodson to raise 20-25 million

Because their last attempt at sale failed , Rite Aid was hesitant about going into negotiations yet again . Dodson decided from the start that his bid would contain a little bit of wiggle room ' Each bidder was given a 2 hour management presentation and after that presentation , they were expected to place a new bid within 10 days

Dodson prepared heavily for this meeting by studying store by store profit and loss statements and balance sheets . He sorts through leases workers ' compensation claims , union agreements and pension /health benefit plans . Lastly , he viewed employee severance agreements . After review of these materials , he decided on 25 of for management

Before meeting , he still had several concerns , he believed more needed to be done with due diligence to date . He didn 't feel he was knowledgeable enough with large retail organizations . And he has to hire someone to explain financial records to him . Lastly , his concern for financing the deal were still apparent

Overall , Dodson did a great deal of negotiation . He showed his concerns while working towards them by conduct several on-site due diligence report . In his January 2 letter , he offered a range of a bid , while explaining the need for future reports . He also took time to explain his need to meet further with the management group

He also went on to explain who the investors were from Falcon : seven private investors who have extensive experience with acquisitions of this size and larger . Our equity capabilities exceed those required to adequately finance this transaction , and we foresee no problems in financing a well-structured proposal ' The time he took to explain who these people are would have given me even greater confidence as a member of AADP management 's group because of his great confidence and concern in future company success

His structural proposal composed a management buy-out with employee participation . This was a great move by Dodson showing the company he...