Vol. 2, Issue 6, Part A (2016)

This paper develops a two-person Merger & Acquisition model that intends to provide a simulation model in order to understand if the final negotiated price of an Merger & Acquisition transaction equals the mid-point of the acquirer’s offer and target’s bid price. Also, it reviews behavioral factors that can be part of Merger & Acquisition valuation and uses the model to simulate results to identify, in this case, if it is better for the acquirer to be risk taking or risk averse and for the target to be optimistic or pessimistic.