Breaking an impasse at mediation over price requires creativity. But before a mediator can make progress, he or she needs to uncover and understand the unspoken psychological, emotional, legal or other obstacles that are preventing either or both of the parties from making any further moves.
In one case I mediated, an international celebrity had sold her name and likeness to a large entertainment company for tens of millions of dollars in stock. Unfortunately, the company filed for bankruptcy, and the shares became worthless. The celebrity sought to reacquire her name and likeness from the debtor’s estate, but the bondholders who held the most senior claims balked at the price she offered. They countered with what the celebrity considered an outrageous demand. The celebrity’s leverage was that if she stopped promoting herself, her name and likeness would become worthless. The parties were at an impasse.
I had thought the fight was simply about valuation. But during the mediation, I determined that the bondholders’ intransigence stemmed from a fear that they would return the celebrity’s name and likeness to her for a “low ball” price, and then look like fools when the celebrity resumed aggressive promotion of her brand, and its value skyrocketed.
To get past this fear, I structured a royalty deal that would provide bondholders with a percentage of revenue so that if the value of the celebrity’s name and likeness soared after the sale, bondholders would share in the upside.
In short, while it seemed the parties were fighting over price, the bondholders’ demand wasn’t based on any sort of rigorous valuation, but instead was designed to send a message that they weren’t about to let the celebrity take advantage of them. But she interpreted their counter as egregious overreach. The takeaway is that probing to ascertain underlying interests and concerns can help close a gap on price that initially seems unbridgeable.