The Art of Doing Deals....

Lately, I've become very interested in the art of deal-making....

What I want to ask is, does anyone know any good resources to learn more about successful "deal-making" ?

I know this crops up in many different areas....

Chatteling could be see as a form of deal-making.... You are making a deal when you buy and also when you sell....

Similarly, dealing in property is related too.... Certainly various techniques, such as "nothing down" techniques, finding highly motivated sellers, and so on, is all part of deal-making....

And on a larger scale, there are the deal makers who deal with buying and selling companies....

I'm currently reading the book, "The 50 Best (and Worst) Business Deals of All Time," by Michael Craig. It's a fascinating book.... While most of the deals are about big business deals, there are a few other gems in there too, such as the Louisiana Purchase (of how the fledgling USA bought the Louisiana Territory from France, which later was divided into 13 states), or the purchase of Alaska from Russia, or Priscilla Presley's control of the Elvis Presley Estate....

Anyhow, beyond that, does anyone have any good suggestions for books on general aspects of "deal making" ? If you have anything to suggest, please let me know....

If you are interested in big business deals with a few other interesting gems thrown in, I do recommend "The 50 Best (and Worst) Business Deals" as a fascinating read.... :)

- Dien Rice

Almost all businesses do deals.... So deal making is very important....

I just want to highlight one particular deal.

Many people rave on about Bill Gates, because he's now the richest person in the world.... They want to learn the secret of his success.

What is that secret?

Well, some say it could be traced to ONE deal he made.... Or, perhaps more accurately, it's the result of two simultaneous deals....

The first deal was the deal that Bill Gates and Steve Ballmer hammered out with IBM in 1980. IBM wanted to get into personal computers. The guy in charge of the IBM PC project was a guy named Bill Lowe. He was given a very short deadline: the IBM PC was to be out in one year.

Normally, IBM did everything in-house. However, this short deadline forced Lowe to outsource the operating system. Originally, they wanted to do a deal with someone else, but they wouldn't sign the non-disclosure agreement, so IBM couldn't tell him all they had in mind. That's where Bill Gates came in....

Because Gates did sign the non-disclosure agreement, he knew the big plans IBM had. He knew what an important position the company which provided the operating system to IBM would be in....

So, Bill Gates and Steve Ballmer did a deal to provide the operating system for the IBM PC.

But Microsoft did not have an operating system.

Almost simultaneously, Paul Allen (the other co-founder of Microsoft) was doing another deal with another company, a small company called Seattle Computer. There, he did a deal to buy an operating system called QDOS.... Later renamed as MS-DOS. This was the operating system they then licensed to IBM for the IBM PC....

These two deals gave Microsoft an unprecedented powerful position in the software market....

The lesson here is, the strength did not come from the product -- Microsoft bought that. Their strength came from their deals....

And that's one of the reasons that I've gotten interested in the art of the deal....

Clearly, skillful deal-making is a useful trait for an entrepreneur to have!

- Dien Rice

Thanks Simon.... Bartering is a form of deal-making too.... I've read what Jay says in his book, "Getting Everything You Can Out of all You've got" about this topic, it's quite interesting....

I've been studying the life of one of my heroes, Kirk Kerkorian.

Kerkorian's life has been an example of how far good deal-making can take you -- that's how he's become one of the top 30 richest Americans (with $7.8 billion in wealth)....

In addition to this, everyone praises Kerkorian, as an honest and honorable person. Kirk Kerkorian shows that you can be on the lookout for good deals, and still be a person of integrity....

The best deals tend to be win/win for everyone.

When Warren Buffett buys a company fully (that is, buying the company completely), he's also doing a deal....

Though Buffett's style of deal-making is very simple, because it's generally always the same. He's looking to buy good companies (with growing profits) at cheap prices, but he leaves the management free and intact....

What the manager-founders get out of it is they get money for themselves, yet they still get to run their company like they did before.... Buffett's purchases are always friendly, which is why there are always people happy to sell to him, even though they know that he always pays less than what he believes it's worth. Everyone's happy, so it's win/win....

And of course, another famous deal-maker is Donald Trump.... A lot of his wealth has come from doing deals. Another lesser-known (but much more wealthy) deal maker is John Kluge (he's the 15th richest American, according to Forbes magazine, worth $13 billion).... Much of his wealth comes from a lifetime of buying and selling media companies....

This knowledge works on the small scale or on the large scale. For example, Kirk Kerkorian was buying and selling cars as a teenager, after that he bought and sold planes, and it was only later on that he bought and sold companies (he's bought and sold MGM about three times).... All these activities require knowledge of the art of negotiation....

The applications of this topic are vast....

And as the above examples show, knowing this could make you rich....

- Dien