Wednesday, July 3, 2013
No surprise to me or anyone thinking about the auction literature, from QZ.com:
Generally thought of as unwritten sell-side tactics, the relationships between the total number of bids, the designation of the deal as ‘hostile or not was studied in detail in 2001 by Andrade, Mitchell, and Stafford (“New Evidence and Perspectives on Mergers,” Journal of Economic Perspectives. 15:2, 103-120).
|Hostile Bid* at any point||8.4%||14.3%||4.0%||8.3%|
The above exhibit suggests that in order to extract the highest price, sellers should seek to both expand the total number of prospective bidders and also the number oftimes that each suitor submits a separate bid—the separate and identifiable “bid cycles” of today’s tactics.
Want to get the highest price? Get lots of bidders.