MEDIATE: FAQ ABOUT DEAL MEDIATION
What is deal mediation?
Deal mediation is the negotiation of a business transaction, cross sector project, or complex change initiative as facilitated by a skilled neutral in order to create durable, efficient, and integrated agreements and to promote stronger, resilient relationships among stakeholders. While oriented toward striking agreement, it should also seek to maximize potential outcomes, which means addressing both the needs of individual stakeholders, on the one hand, and the success of the deal as a whole, on the other hand.
What are some of the benefits?
Deal mediation helps parties to develop and preserve business relationships through a tailored, orderly negotiation process impartially facilitated by a skilled deal mediator. An expert professional in negotiation, the deal mediator helps parties frame important issues, identify underlying interests, manage emotions and agendas, improve communication, vet ideas (often in separate caucuses), build consensus, and synthesize an integrated deal that maximizes the chances for a sustainable, successful outcome. In some cases, the deal mediator can also arrange for the preparation of definitive documents, which in turn may be reviewed by the parties’ legal counsel, thereby streamlining the deal making process, saving time and costs. Deal mediation is especially valuable for social impact initiatives and mission-based businesses, whose definition of success necessarily includes many factors beyond financial returns.
How does the process work?
Deal mediation is a voluntary process, so it relies upon the continuing agreement of the parties to work together toward agreement with the support of the deal mediator. At the outset, the parties and the deal mediator will discuss and agree on the role of the deal mediator, as well as any conditions or rules that will apply to the process. Sometimes, the deal mediator will be responsible only for process management; however, most parties desire that the deal mediator work actively to support the objectives of the negotiation using a combination of facilitative, evaluative and transformative approaches. Usually, the parties agree to remain together during the deal mediation; however, occasionally it may be beneficial for the deal mediator to meet with each party separately in caucus.
Tell me about the phases in a deal mediation.
Generally, there are five phases to a deal mediation, which are adapted to the needs of parties.
The first phase INTAKE involves a detailed explanation of the parties’ positions during which the deal mediator will ask clarifying questions and begin to assess the scope of negotiations as well as deal/no deal options.
The second phase ALIGNMENT involves broad discussions designed to further develop facts, clarify goals, identify differences, and assess perspective and communication. Afterwards, the deal mediator will report findings and make suggestions for structuring the negotiation process and timeline.
The third phase NEGOTIATION involves in-depth discussions that frame issues, further develop positions and goals, identify underlying interests, clarify and advance narratives, and propose options and packages that might resolve issues and deal points. At this phase, the deal mediator often will caucus to ascertain potential openings as well as coach parties through areas of conflict. The deal mediator’s goal during the third phase is to facilitate the structure of a deal and ultimately present the parties with a term sheet.
The fourth phase DOCUMENTATION involves the preparation of definitive documents followed by review with the parties and their legal counsel. The deal mediator may continue to be active in negotiations over substantive terms as parties work collaboratively to resolve all outstanding issues.
The fifth phase INTEGRATION arises after the deal has signed and closed. If necessary or desirable, the deal mediator will work with the parties to implement an integration project plan and continue to enhance the success of the deal through periodic facilitation sessions designed to reiterate consensus and advance the parties’ ongoing relationship.
The fourth and fifth phases are usually optional.
The first phase INTAKE involves a detailed explanation of the parties’ positions during which the deal mediator will ask clarifying questions and begin to assess the scope of negotiations as well as deal/no deal options.
The second phase ALIGNMENT involves broad discussions designed to further develop facts, clarify goals, identify differences, and assess perspective and communication. Afterwards, the deal mediator will report findings and make suggestions for structuring the negotiation process and timeline.
The third phase NEGOTIATION involves in-depth discussions that frame issues, further develop positions and goals, identify underlying interests, clarify and advance narratives, and propose options and packages that might resolve issues and deal points. At this phase, the deal mediator often will caucus to ascertain potential openings as well as coach parties through areas of conflict. The deal mediator’s goal during the third phase is to facilitate the structure of a deal and ultimately present the parties with a term sheet.
The fourth phase DOCUMENTATION involves the preparation of definitive documents followed by review with the parties and their legal counsel. The deal mediator may continue to be active in negotiations over substantive terms as parties work collaboratively to resolve all outstanding issues.
The fifth phase INTEGRATION arises after the deal has signed and closed. If necessary or desirable, the deal mediator will work with the parties to implement an integration project plan and continue to enhance the success of the deal through periodic facilitation sessions designed to reiterate consensus and advance the parties’ ongoing relationship.
The fourth and fifth phases are usually optional.
Is deal mediation a confidential process?
It can be, and generally is. The parties decide before the deal mediation begins whether to keep confidential both the content of negotiations and that the deal mediation is taking place. Typically, a confidentiality agreement, or a mediation agreement with confidentiality provisions, is signed by the parties and the deal mediator.