To ensure that the owners of target firms appropriate whatever value is created by a merger or acquisition, managers in these target firms should
A) create a thinly traded market for their firm.
B) seek information from bidders.
C) close the acquisition deal quickly.
D) limit the number of bidders involved in the bidding competition.

Question

Quizplus · Accepted Answer

By seeking information from bidders, target firms can better understand the value that the bidder sees in the firm, and negotiate a price that ensures the owners of the target firm receive adequate compensation for the value created. This also helps target firms to avoid undervaluation or exploitation by potential bidders. The other options do not necessarily guarantee that the owners of the target firm will appropriate value from the merger or acquisition.

To Ensure That the Owners of Target Firms Appropriate Whatever