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Abstract
To the extent target firms in M&A scenarios adjust to better suit their acquirers, they eliminate the option of walking away from the acquisition and continuing as a separate firm. The authors posit that, as a result of this behavior, target firms should not enjoy the same price for equity that they would have enjoyed had the option of independent operation remained viable for a maximum duration while negotiating the transaction. Target firms that engage in reorganization to become a more suitable organ for transplant into the acquiring firm before the acquisition prices are certain may please the potential acquirer but weaken any other party’s willingness to pay for its equity, including their own shareholders.
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