Setting The Table:
       Preparing for Licensing Negotiations



John Buckingham
MaRS Best Practices Series
April 14, 2010
What to do before…
Today’s Objectives



  Understand  what `good’ preparation for
   negotiations looks like
  Consider approaches to enha...
Negotiation Perspectives
Group Input




         What should you do,
  before starting formal negotiations?
Key Elements of Thorough Preparation

Due Diligence     Playbook          Environment   Negotiation Team




  Conduct `D...
Key Elements of Thorough Preparation

Due Diligence       Playbook        Environment     Negotiation Team


  What is th...
Key Elements of Thorough Preparation

 Due Diligence              Playbook               Environment   Negotiation Team


...
Key Elements of Thorough Preparation

Due Diligence      Playbook   Environment   Negotiation Team


Seven Key Elements :
...
Key Elements of Thorough Preparation

Due Diligence    Playbook     Environment   Negotiation Team

Interests
  Determine...
Alliance Structure and Management Considerations

                             Vulnerable Enthusiast    Dynamic Duo
      ...
Key Elements of Thorough Preparation

Due Diligence    Playbook     Environment   Negotiation Team


Options
  Identify p...
Key Elements of Thorough Preparation

Due Diligence   Playbook          Environment   Negotiation Team


                 ...
Key Elements of Thorough Preparation

Due Diligence   Playbook          Environment   Negotiation Team


                 ...
Key Elements of Thorough Preparation

Due Diligence      Playbook        Environment   Negotiation Team


Alternatives
  ...
Key Elements of Thorough Preparation

Due Diligence      Playbook       Environment     Negotiation Team


Legitimacy
  P...
Key Elements of Thorough Preparation

Due Diligence   Playbook     Environment   Negotiation Team



Communication
  Plan...
Key Elements of Thorough Preparation

Due Diligence   Playbook      Environment   Negotiation Team



Relationship
  Keep...
Key Elements of Thorough Preparation

Due Diligence    Playbook       Environment     Negotiation Team


Commitment
  Thi...
Key Elements of Thorough Preparation

Due Diligence   Playbook      Environment   Negotiation Team




Shaping Environment...
Key Elements of Thorough Preparation

Due Diligence    Playbook      Environment    Negotiation Team



Selecting and Prep...
`Emergency` Preparation


Focus On:
  Interests
  Options
  Alternatives
  Legitimacy
Resources

Professional Associations:
  Licensing Executives Society (USA & Canada) – Toronto Chapter
     www.lesusacan...
Today’s Objectives



  Understand  what `good’ preparation for
   negotiations looks like
  Consider approaches to enha...
Questions?
Setting The Table:
       Preparing for Licensing Negotiations



John Buckingham
MaRS Best Practices Series
April 14, 2010
Setting the Table: Preparing for licensing negotiations
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Setting the Table: Preparing for licensing negotiations

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John Buckingham, former Johnson & Johnson Pharma VP of Business Development and SVP, Alliance Management for a semi-virtual US specialty pharma company, explores a number of key considerations in preparing for negotiations of original licensing agreements, as well as for re-negotiations, a common requirement of both successful and struggling collaborations.

John focuses particular attention on how to better understand the needs and motivations of a prospective partner and, closely related to this, what governance considerations to strive for during negotiation of an agreement.

This session is a must for anyone who has had direct, personal experiences with the "good, bad and the ugly" of licensing agreements.

Part of the MaRS Best Practices Event Series: http://www.marsdd.com/events/details.html?uuid=59a78761-cac4-4015-a5a5-7f63522408e9

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Setting the Table: Preparing for licensing negotiations

  1. 1. Setting The Table: Preparing for Licensing Negotiations John Buckingham MaRS Best Practices Series April 14, 2010
  2. 2. What to do before…
  3. 3. Today’s Objectives   Understand what `good’ preparation for negotiations looks like   Consider approaches to enhance effectiveness and efficiency of your efforts to prepare   Identify resources for additional information
  4. 4. Negotiation Perspectives
  5. 5. Group Input What should you do, before starting formal negotiations?
  6. 6. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team   Conduct `Due Diligence’ Investigation of Potential Partner   Prepare Negotiation `Playbook’   Shape Negotiating Environment   Select and Prepare Negotiation Team
  7. 7. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team   What is their strategic focus?   Are they financially sound?   Check conduct/outcomes of current and past partnerships:   Reference sources: Press releases, SEC filings, ReCAP, Windhover, etc.   Personal networking (adhering to confidentiality requirements)   Use technical due diligence activities collect relevant information from prospective partner staff
  8. 8. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Prepare Negotiation `Playbook’: Some Key Principles:   Focus on interests, not positions (of both parties)   Identify/create options likely to satisfy both parties Reference: `Getting to Yes’, R. Fisher, W. Ury & B. Patton, 2nd Ed. (1991), Houghton Mifflin Co.
  9. 9. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Seven Key Elements :   Interests   Options   Alternatives   Legitimacy   Communication   Relationship   Commitment
  10. 10. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Interests   Determine what you need or care about   Strive for alignment with company stakeholders regarding `what’ and `to what degree’, for key interests   Anticipate the business interests of the potential partner and the personal interests, relevant to the negotiation, of their negotiating team
  11. 11. Alliance Structure and Management Considerations Vulnerable Enthusiast Dynamic Duo High Strategic Importance to Your Company Imbalance Balance Balance Imbalance Low Simple Pairing Potential Bully Low Strategic Importance High Potential Partner
  12. 12. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Options   Identify potential ways in which greater value could be created, i.e. `increasing the size of the pie’   Develop alternative ways to satisfy your interests and to solve anticipated problems in the negotiation
  13. 13. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Alternatives
  14. 14. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Alternatives
  15. 15. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Alternatives   BATNA   Best Alternative To Negotiated Agreement   May include:   Other potential partner(s)   Continuing independent development   Merger or partnership alternatives   Other creative options
  16. 16. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Legitimacy   Prepare supporting rationales for your key goals:   Industry benchmarks   Precedents   Accepted Principles   Supports `fairness’ of your view   Provides other team with `fairness’ arguments for their stakeholders
  17. 17. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Communication   Plan for effective communication of your key interests (to ensure these are heard properly by partner)   Anticipate what you expect to hear from partner regarding their key interests (so you can be more alert to new information)
  18. 18. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Relationship   Keep in mind that the relationship tone during negotiations carries forward into a future relationship   Plan for a constructive, joint problem-solving approach, rather than a win/lose mindset
  19. 19. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Commitment   Think through what `done’ means   Identify the activities and/or level of performance you will need from your potential partner, to properly address your interests   What `consequences’ are appropriate to negotiate, to better ensure your partner will perform as planned?
  20. 20. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Shaping Environment   Creating positive `buzz’ about your offering   Use of public statements to reinforce key interests   Recruiting/developing influential champions   Identifying and developing `back channels’
  21. 21. Key Elements of Thorough Preparation Due Diligence Playbook Environment Negotiation Team Selecting and Preparing the Negotiation Team   Determine who will represent potential partner   Designate negotiation leader   Define roles of other team members   Review key elements of Playbook with team   Establish guidelines for confidentiality
  22. 22. `Emergency` Preparation Focus On:   Interests   Options   Alternatives   Legitimacy
  23. 23. Resources Professional Associations:   Licensing Executives Society (USA & Canada) – Toronto Chapter   www.lesusacanada.org   Canadian Healthcare Licensing Association   www.chlassoc.ca Courses:   Harvard Business School:`The Program on Negotiation for Senior Executives’   www.pon.harvard.edu/category/courses-and-training/   Stitt Feld Handy Group: Negotiation Workshops (Canada)   www.sfhgroup.com/ca/training/negotiation/
  24. 24. Today’s Objectives   Understand what `good’ preparation for negotiations looks like   Consider approaches to enhance effectiveness and efficiency of your efforts to prepare   Identify resources for additional information
  25. 25. Questions?
  26. 26. Setting The Table: Preparing for Licensing Negotiations John Buckingham MaRS Best Practices Series April 14, 2010

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