The Louisiana Purshase and Other Great Deals
What do Priscilla Presley, Thomas Jefferson and the takeover firm of Kohlberg Kravis Roberts & Co. (KKR) have in common? The answer: They all know a good deal when they see one, according to Michael Craig, author of The 50 Best (and Worst) Business Deals of All Time.
In this highly entertaining book, Craig, a class-action lawyer, uses 50 snapshot case studies of a wide variety of good and bad business deals to illustrate his 10 rules for successful negotiation.
Craig's rule number one, for example, is to "focus on your strengths." One of the cases illustrating this rule is Priscilla Presley's management of the estate of her late husband, Elvis Presley.
Presley had been a notoriously bad money manager. After his 1977 death, his estate of $4.9 million (left to his daughter, Lisa Marie) was being quickly depleted. Within several years, all of the money would have been gone. In 1979, Elvis Presley's first executor, father Vernon Presley, died and Priscilla Presley took over.
With a group of advisors, Presley formed a company called Elvis Presley Enterprises, Inc. and developed a strategy to mine the Elvis Presley brand, thus building up the estate. Her first decision was to open Graceland to the public (rather than sell it off to pay bills). The company also battled merchandisers who were capitalizing on Elvis Presley without paying the estate, recouped unpaid royalties from Presley's music catalog, and expanded into merchandising itself. The result: In 1998, Elvis Presley Enterprises earned $35 million that year alone. "Dead Elvis," Craig points out, "began out-earning live Elvis's best earning year in 1988."
More Deals, Good and Bad
Rule number two for negotiating good deals, according to Craig, is to "take advantage of your adversary's weakness." This is what Thomas Jefferson and his emissaries did in 1803 when France's money woes (it was looking for cash to finance a war against Great Britain) gave them the opportunity to purchase the 800,000 acres of the Louisiana Territory at a bargain price.
Kohlberg Kravis Roberts & Co. (KKR), notorious for its buyout of RJR Nabisco, appears four times in the book, although not all the deals featured are good ones.
One successful KKR deal was its buyout of Duracell, which illustrates rule number six: "Take care of the little people." In this case, the little people were Duracell's top managers, who had been stifled under the previous owner, Kraft. KKR convinced 35 Duracell managers to become part owners of the company and followed their advice on some key management issues. Duracell thrived and the managers, as well as KKR, made a huge return on their investment.
Other cases in the book range from Sony's 1989 acquisition of Columbia Pictures to Ray Kroc's 1955 agreement to franchise McDonald's to the Canarsee Indians' 1626 sale of Manhattan to the Dutch.
Each of the case studies ends with a box that explains in one or two paragraphs "What Went Right" or "What Went Wrong." This slim book from Career Press is a unique resource for businesspeople or anyone else involved in negotiations who are looking for guidance and inspiration - or who are simply wandering through some of the footnotes of history.