Optimal Offer Strategies in Mergers and Acquisitions

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

This paper models the corporate takeover process as a bargaining game under certainty. During the takeover process, an acquirer is generally uncertain about the minimum price the target shareholders will accept. Normally, a takeover is concluded after a sequence of offers have been made. This paper derives optimal offer strategies for the buyer at each stage of this bargaining game under uncertainty. Uncertainty about the target's minimum acceptable price is represented by a probability distribution. Optimal offer strategies depend on the probability distribution of the minimum acceptable price, which can change during the offer process.

Original languageEnglish (US)
Pages (from-to)591-601
Number of pages11
JournalDecision Sciences
Volume20
Issue number3
DOIs
StatePublished - 1989

Keywords

  • and Policy
  • Bargaining Behavior
  • Game Theory
  • Strategy

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

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