Provides a basis for evaluation of mergers and acquisitions. It is assumed that the hallmark of a good deal is the fact that it creates value for the shareholders, ie has a positive NPV transaction. Looks to deal NPV as the buyer and seller perspective. Explains how a positive NPV of the transaction leads to positive cumulative abnormal returns predicted. He then provides the basis for calculating the NPV of the transaction based on the consideration paid, the work to be done, the target value and the value created through restructuring and synergy. Concludes by introducing the notion of "the fragility of risk", which basically is a risk that the buyer plans go awry. "Hide
by Carliss Y. Baldwin Source: Harvard Business School 8 pages. Publication Date: October 18, 2007. Prod. # : 208060-PDF-ENG
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