LAUSR

The recent surge in MA the alternative is to design an acquisition program that allows moving in small steps by acquiring a minor company first and the larger prominent player later on. We employ a dynamic game-theoretic real options model to investigate the effect of uncertainty and synergies on the strategy choices and also consider alternative contract designs for the acquisition program, such as hostile, friendly or mixed. Our findings reveal that firms prefer acquisition programs to big leap strategies when the industry exhibits high levels of uncertainty and can occur even when the acquisition of the first target destroys value. Moreover, some acquisition programs profit from a first-mover pass-through where the acquirer can jointly utilize his first-mover advantage when negotiating with multiple targets. Finally, novel testable hypotheses are derived from the model.