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Mergers and Acquisitions

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    1. Mergers and Acquisitions

    3. Acquiring Firms Benefit Appropriate Incentives (rule 1) Stock options rather than growth targets Scaled returns measures Win with information economics (rule 2) Act Rapidly Obscure information from target Obscure information from other bidders Avoid Winners curse VRIO tests of synergy (rule 3)

    4. Target Managements Duty Find alternative bidders white knight auction Golden parachutes Diversified firms are most effective when organized as multi-business or M-form companies with appropriate incentives

    5. Thought for the Day