Investment Negotiation Exercise with Ocean Business Services Founder
Preparation
As a general partner in Veranderen Markets, I am interested in widening the firm’s conservative portfolio by investing in Ocean Business Services (OBS). I aspire to conduct a successful investment negotiation with the company’s founder and set a common ground to create value for both organizations. Most importantly, I desire to get the best terms of investment for my company while helping OBS solve financial and investment problems. Despite my interest in OBS, I have specific reservations about the maximum amount of investment I can offer to the organization and the minimum amount of equity I expect from the initial investment and other follow-up rounds of investments. I am willing to invest between $950,000 and $1,000,000 for at least 10 percent of ownership in the company.
Negotiation Success
My negotiation strategy for portfolio investment is problem-solving. This strategy will entail scrutiny of the investment proposal, examining each party’s interest in the investment, and discussing issues arising from it to ensure each party is content with the ultimate agreement. Besides adopting this negotiation strategy, I will ensure that any contentious tactics employed during the negotiation are discussed and clarity is emphasized throughout the process to ensure each party pursues its planned interest in the investment. Sometimes, there may be several traps during negotiations. I will avoid these traps by discussing all the right issues that align with the investment objectives and considering different offers for OBS. I will also maximize my gain in the negotiation by demonstrating how the investment proposal will benefit OBS rather than focusing on its benefits to the venture capital.
Overall, I am positioned in the “offering” side of the field in the investment negotiation process. As the party interested in investing in OBS, I will pitch my investment offer and the expected equity stake. Based on my evaluation, OBS’s pre-money valuation is $5,000,000, suggesting that $950,000 to $1,000,000 will be an adequate investment in the company.
