Monday, May 17, 2010
For those of us on a university calendar, it's already summer. It's a great time of year to attack that pile of reading that's been accumulating on the corner of my desk. Funny, reprints no longer take up much space on my desk since I get most of that stuff online these days. I do have an increasingly large pile of books, however. At the top of that pile is Guhan Subramanian's Negotiauctions. Negotiauctions builds on an earlier work Prof. Subramanian did with Richard Zeckhauser on negotiations and the sale process. Subramanian defines a "negotiauction" as a process in which the seller is both a passive player (the auction component) as well as an active player (the negotiation component). During the auction component, Subramanian notes, the bidders do much of the work in terms of pushing up the price. During the negotiation component, which may be simultaneous with the auction component, boards of sellers take a much more active role in generating value. Although life would be easier if the merger process were simply a binary process, Prof. Subramanian is entirely correct in his set up. It's both. That's what can make it so complex. On the one hand deal protection measures can hinder an auction, on the other a well-motivated board can use the same measures to negotiate a higher value. It's a world of grey.
This book is steeped in the academic literature of auction theory and negotiations, but is written for a more general audience. It's well worth the read. The Kindle edition means that you can even read it on vacaction.