Capital mortgage insurance corporation

Since the relationship with Burr is important to Capital Mortgage Insurance, an agreement on an acceptable price for both Northwest Equipment Corporation the CMI’s parent corporation and the fourpartners of CTS is necessary. A collaborative strategy would be the best move for them. If they are not able to come to an agreement, CMI can maintain a good relationship with Elliott Burr for futureventures.
CMI had $9 million approved for the acquisition, but did not want to spend more than $600 thousand plus the book value of $420,000 for full purchase of CTS. Both Randall and Dolan agree thatthis is a low price and seem hesitant on which way to proceed. CTS believes they are worth $6.25 million plus and 80% stake. Some of the CTS executives have invested more money in the company and areinterested in recouping some of the investment. Randall feels that the company is becoming an embarrassment for Burr because of its poor performance.
Randall needs to find possible alternativessince both he and Dolan are hesitant about the offer. Options could be:
At the negotiation table CMI could present research completed on CTS’s operations to gain advantage. CTS partners needassurance that they will receive some of their investment back and details assuring this plan could be negotiated.
CMI followed correct negotiation process by first getting into a good position. It wasobvious that CTS was eager to sell. CMI employed strategic moves by doing background research and determining the value the CTS would be to CMI in acquisition. CMI also enlisted support from Metro net,who was already involved with CTS.

BATNA (Best Alternative To a Negotiated Agreement)
Should an agreement not be made, CMI’s BATNA will be to start their own relocation services company, orlook for another similar company to acquire. The $9 million approved by the parent company gives CMI the ability to look further for an existing company, or the means to begin their own company. CMI...