***M.Sc. Students, this event can count towards one of the six mandatory Research Seminars Series needed to attend (MHS6991 or MGT6991).***
Micah Officer, PhD
We connect the extensive theoretical negotiation and auction literature to real-world practice using a rich, hand-collected data set offering a comprehensive picture of high-stake merger and acquisition (M&A) negotiations for 322 deals that aggregate more than $2.4 trillion in deal value. We find that a full-scale auction is not a common way to sell a firm, and about 75% of our sample deals switch to negotiating with only one buyer in the final stage of the sale process. Moreover, the majority of our sample involves a fluid deal process that changes the nature of the deal (negotiation or auction) as the process proceeds. Most initiating bidders have higher valuations for the target and are the eventual winning bidders. On average, it takes two to three months for the merging parties to reach an agreement on offer prices, and the delay is related to information asymmetry, valuation uncertainty, and potential outside options. Most bidders experiment with offers, but the final premiums are largely similar regardless of the number of offers made by the bidder. About half of the target firms make counteroffers during negotiation; most of the time, the target and the bidder split the price differences. The empirical patterns we document challenge some common assumptions on which much of auction theory is based. Our findings call for further developments in theories that consider the inherent interconnectedness between auctions and negotiations as in the real world.
***Paper will be provided via confirmation and reminder emails.
About the Speaker
Micah Officer is a Professor of Finance at Loyola Marymount University in Los Angeles. Micah has taught introductory and advanced finance classes at three major universities in Los Angeles (Loyola Marymount, UCLA, and USC) to students at all levels (undergraduates, MBA, and Executive MBA), with a specialized focus on valuation, financial modeling, corporate finance, and mergers and acquisitions (M&A). In addition, Micah has run numerous day-long executive education (non-degree) courses in finance for groups of executives from local companies.
Micah has given lectures, seminars, and discussions about academic research in over 50 universities and conferences in more than 20 countries around the world. Micah’s research focuses on corporate finance and corporate governance issues, including M&A, leveraged buyouts, dividend policy, executive compensation, bankruptcy and financial distress, initial public offerings, and directors’ and officers’ liability insurance. This research has also resulted in a number of publications in top-tier finance journals, such as the Journal of Financial Economics, Journal of Finance, Journal of Business, Journal of Accounting and Economics, and Journal of Corporate Finance. Micah was an Associate Editor of the Journal of Financial Economics from 2006 - 2021, and his paper titled “Inter-firm linkages and the wealth effects of financial distress along the supply chain” (co-authored with M. Hertzel, Z. Li, and K. Rodgers) won the Fama/DFA prize for best capital markets paper published in the Journal of Financial Economics in 2008.
SPECIALTIES:
Corporate Finance, Corporate Governance, Mergers and Acquisitions, Valuation, Financial modeling
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