The article “The Target-Side Acquisition Process: Active Boards and Value-Enhancing Negotiation Decisions” co-authored by Assistant Professor Stevo Pavicevic (Frankfurt School of Finance and Management), Professor John Haleblian (UC Riverside) and Professor Keil has been selected for publication in Academy of Management Best Paper Proceedings 2019.
The paper develops a target-side perspective of the role of boards in M&A negotiations. The acquisitions literature often portrays target-side boards of directors as largely passive thereby ignoring their potentially important role in shaping decisions during the acquisition negotiation process. The paper integrates research on board activity from management and finance with research on group activity from social psychology to determine whether the frequency and timeliness of target board meetings facilitate negotiation decisions that lead to better deal terms. Drawing upon over five hundred acquisition negotiations between publicly listed US companies between 2002 and 2015, the paper shows that frequent and timely meetings make target boards more likely to improve deals for targets as they reject first offers, increase competition in bidding, and make counter offers. Moreover, in supplemental analysis, it shows that such decisions positively influence target premiums. In other words active target boards negotiate better deals.