Decision-making from a risk assessment perspective for Corporate Mergers and Acquisitions

Corporate Mergers and Acquisitions (M & As) are notoriously complex, and risk management is one of the essential aspects of the analysis process for decision-making on M & A deals. Empirically, we see that some M & A transactions are not successful in part because of the increased exposu...

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Bibliographic Details
Published in:Computational management science 2015-04, Vol.12 (2), p.243-266
Main Authors: Lee, Jinwook, Prékopa, András
Format: Article
Language:English
Subjects:
Acquisitions
Acquisitions & mergers
Anniversaries
Business and Management
Company mergers
Correlation
Decision making
Divisions
Management science
Marketing
Markets
Operations Research/Decision Theory
Optimization
Original Paper
Random variables
Risk
Risk assessment
Studies
Texts
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Summary:Corporate Mergers and Acquisitions (M & As) are notoriously complex, and risk management is one of the essential aspects of the analysis process for decision-making on M & A deals. Empirically, we see that some M & A transactions are not successful in part because of the increased exposure to correlated sectors, suggesting that the merged entity possesses increased risk in the market. This motivates our research on risk evaluation processes for corporate M & A deals. In this paper, a decision making scheme using a reasonable risk measure is introduced and surveyed. Numerical examples are presented.
ISSN:1619-697X
1619-6988
DOI:10.1007/s10287-014-0221-y