Negotiation Preparation Worksheet for Earth Escape Project

This assignment presents a completed Seven Elements Negotiation Preparation Worksheet, focusing on a hypothetical scenario involving the 'Earth Escape' project and its negotiation with 'Aerovent Capital.' The worksheet systematically addresses seven key elements: Alternatives (BATNA), Interests, ...Read More

Seven Elements Negotiation Preparation Worksheet
Seven Elements Negotiation Preparation Worksheet1
1. ALTERNATIVES
(Alternatives are actions you can take without their agreement, including agreements with other parties, self-
help, or maintaining the status quo)
Your alternatives? Their alternatives?
(circle your BATNA) (circle your estimate
of their BATNA)
A Minimum of 45 substantive Points will
Be required to carry out with the deal. In
Case were such points are not reached
The company may look to work with
Other venture capital firms
Their BATNA may be maintain the status quo and
look of other projects which are available in the
market
Ways to improve yours? Ways to test theirs, or, if
appropriate, worsen?
Finding more Venture capital firms
who are looking to invest in the
Aerospace project is a way of
improving the BATNA. Their
BATNA can be worsen by Providing
them with the prospect of a
multibillion industry which if they
do not be a part of they would miss
out on a significant opportunity.
Their BATNA can be tested by
analyzing the other form of projects
which are available in the market
and whether they can afford to
maintain the status quo and let the
opportunity go.
2. INTERESTS
(Interests are a party’s true needs, concerns, desires, hopes, and fears; they may or may not coincide with
the stated positions)
Your interests? Their likely interests?
 To procure investment for the project
 It would be better if along with the
funding relative expertise is also attained
 Long term relationship is developed with
 To make maximum profit out of the
investment for the project
 They would also be looking for a long
term relationship
1 Based on the Seven Elements framework developed at the Harvard Negotiation Project, and described in
Patton, Bruce, “Negotiation,” in M.L. Moffitt and R.C. Bordone, The Handbook of Dispute Resolution (San
Francisco, CA: Jossey-Bass, 2005).

Seven Elements Negotiation Preparation Worksheet
the other party
 The party is provided with minimum
equity between 33-40% but less than 50%
 Providing the other company with
common stock or at max convertible
preferred stock but not redeemable
preferred stock
 Not providing dividends at initial stage of
the project
 Providing them Anti-dilution rights is not
a problem
 Allowing two board of directors but not
three to the other party
 No CEO removal provisions
 No “No shop provision”
 They would be looking for an equity of
50% or more
 They would be looking for redeemable
preferred stock
 They would be looking for outright
dividends
 They would be looking for Anti-dilution
rights
 They would be looking at three Directors
in Earth Escape
 The would want a CEO removal provision
 They would want a No shop provisions
Possible mutual interests?
The possible mutual interests are that both the parties would be looking to work together for a longer period
and ensure the well being of the new project. No party has any dispute in relation to the Anti-dilution Clause.
If the agreement is concluded it would be of benefit to both the parties.
3. OPTIONS
(Options are the various things to which the parties to this negotiation could agree; list possible options for
each issue or major interest):
Options for issue #1?
Providing them with an equity of 33-40%
Providing them with an equity of up to 45% where other terms are in our favor
Options for issue #2?
Providing them with a common stock
Providing them with a convertible preferred stock
Options for issue #3?
Providing them with No dividends

Seven Elements Negotiation Preparation Worksheet
Providing them dividends at an annual rate of 2%
Option for issue #4?
Providing them with Anti dilution Rights
Option for issue #5?
Appointing two of their directors
Appointing two of their directors
Option for issue #6?
Limiting the right to leave the company for three years
Limiting the rights to leave the company for four years
Option for issue #7?
No CEO replacement provisions
Accepting conservation projection as a bench mark
Option for issue #8?
Not include the ne shop provision
4. LEGITIMACY / CRITERIA
(Legitimacy is the way in which an agreement can be viewed as fair or justifiable, based on relevant
objective standards, principles, norms, or criteria; identify possible criteria for each issue)
Possible relevant standards/norms/criteria?
The possible relevant standard are those which are generally accepted by the country
Objective criteria for issue #1?
The objective criteria in relation to equity is that the higher the valuation of the company the lower the
percentage of equity.
Objective criteria for issue #2?
If redeemable preferred stock is provided the other party would be able to fully redeem its
initial investment in situation of liquidation as well as take total equity percentage of any other
proceeds. Thus it would not be fair and fairness is a criteria.
Objective criteria for issue #3?
As the company is in a initial development phase providing cash dividends could hamper the position of the
company. In this situation the profit made will be the objective criteria.
Objective criteria for issue #4?
Fairness is a criterion for this issue as it would be unfair not to give the right to purchase equity first to the
other party in case of required funding.

Seven Elements Negotiation Preparation Worksheet
Objective criteria for issue #5?
The decision making capacity is a criteria in relation to the appointment of board of directors
Objective criteria for issue #6?
Trust is a criteria in relation to vesting of founders share. As it is required for a long term relationship
Objective criteria for issue #7?
Trust is a criteria in relation to removal of CEO. As it is required for a long term relationship. In addition
industrial customs provide for the selection of a conservative approach as the CEO does not have control
over all aspects.
Objective criteria for issue #8?
Trust is a criteria in relation to the no shop provision. As it is required for a long term relationship
5. RELATIONSHIP
(Relationship includes that between the parties at the table as well as those with other interested parties,
such as clients, colleagues, and constituencies)
Relationships at stake in this negotiation?
In this negotiation the relationship which are at stake are that of Earth Escape with Aerovent Capital and
between the shareholders of Earth Escape and Earth Escape.
Current status of each relationship? Preferred status?
Relationship between Earth Escape and Aerovant
has been previously subjected to conflict
The relationship is desired to be strong for the
future of the project
The relationship between other shareholders of
Earth Escape and Earth Escape is good.
The status quo is preferred
If gap exists between current and preferred status, possible causes?
Possible clauses for the existence of gap are the lack of agreement between the two parties in relation to a
previous negotiation.
In light of these causes, what steps might you take to change the current relationship to the preferred one?
The gap can be bridged by signifying to Aerovent the intention of Earth Escape to form a strong long term
relationship which is for mutual profit of both the parties.

Seven Elements Negotiation Preparation Worksheet
6. COMMUNICATION
(Communication includes any verbal or non-verbal signals that convey meaning between parties)
Things to say or disclose?
The potential of profit which Earth Escape project has the potential to make
Things to disclose carefully or not at all?
Things which are not to be disclosed include the BATNA.
The acceptable substantive points for continuing the deal
Things to listen for/questions to ask?
Their point of view
Possible communication problems/barriers?Steps to avoid problems/overcome barriers?
Ego between the parties
Lack of understanding
The problem can be solved by enhancing the communication which may be facilitated by mediator.

Seven Elements Negotiation Preparation Worksheet
7. COMMITMENT
(Commitment includes the manner and level of agreement on some or all issues)
Your authority to commit?
I have full authority to committed
Their authority to commit?
The agents have to take full approval before committing
What level of commitment do you want in this meeting?What level do you want eventually?
 No commitment?
 Joint recommendations?
 Tentative agreement?
 Agreement regarding process or future meetingshis meeting
 Firm, signed deal- Eventually
What steps can you take (in the negotiation process and/or in the terms of the agreement) to make the
agreement operational and durable?
The agreement can be made optional and durable where the interest of both the parties is addressed and
provisions for a long term relationships are laid.