Monday this week was Star Wars Day … May the Fourth be with you.
In a galaxy far, far away I thought I should honour the date by writing about the sale of Lucasfilm, George Lucas’ production company that was responsible for creating the Star Wars franchise.
Lucas sold Lucasfilm to the Walt Disney company in 2012 for a whopping USD$4.05 billion, but not before a gruelling 18 months or so of negotiations. One of the many interesting aspects of the negotiation was Lucas’ clever strategy of strengthening his BATNA, which is what negotiators call their Plan B.
BATNA stands for Best Alternative To a Negotiated Alternative, a term coined by Roger Fisher and William Ury in their seminal book, “Getting to Yes: Negotiating Without Giving In”. A BATNA is your best alternative if you walk away from the deal. It is important because it strengthens your negotiating power. If you have a strong BATNA, you won’t be tempted to give in to a sub-optimal deal. It means you can resist making concessions and push for what you want because you have a viable alternative.
So what did George Lucas do and what was his BATNA in the negotiations with Disney? If the negotiations with Disney had broken down or did not meet his minimum requirements, Lucas’ BATNA was the sale of Lucasfilm to other potential buyers. During his negotiations with the then Disney CEO, Bob Iger, Lucas never lost sight of this.
Over the months of negotiation, Lucas focused his attention on cultivating prospects for the company and increasing its attractiveness to Disney and to other potential buyers. He appointed a new, younger leadership team, he employed writers to start developing the next trilogy of Star Wars films and he approached some of the original cast (including Carrie Fisher, Harrison Ford and Mark Hamill) to see if they would consider returning to the franchise in their original roles.
Lucas was determined not to sell Lucasfilm at its stand-alone value but at a price that recognised the synergies with Disney and the work underway to expand the Star Wars franchise. Not only did these actions increase the value of Lucasfilm for Disney but they improved Lucas’ BATNA as the company became more attractive for other buyers too.
This case study serves to remind us that you should never enter a negotiation without first determining your BATNA, and the BATNA of the other party. BATNAs are a key weapon in a negotiator’s arsenal.
If you can find ways to strengthen your BATNA, you’ll have good options if you need to walk away (or Skywalker-way) and you might also find that the improved BATNA leads to a more Lucas-rative deal.
Apologies for the puns but, after all, all is fair in love and Star Wars.