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(P1 (distinction, Do M&A actually create value?, Why not just acquire…

- - - - combining two companies
      - similar size
      - friendly approach
    - - purchase or takeover
      - friendly or unfriendly
      - hostile takeover
  - - - need to pay a premium over the target's market value
    - - in short-run
        
        sometimes in positive,sometimes in negative, on average, neutral
      - in long -run
        
        significant decline(on average)
      - M&A actually end up destroying value.
  - - - the stock market value of accompany reflects its fair price at any point in time
    - - the winner in an auction is biggest error in overvaluing the target, they need to pay too much.
      - solution
        
        absolute secrecy
        
        to avoid other companies getting wind of the merger and jumping into the bidding frame
  - - - good reason
        
        superior acquisition & integration capabilities
        
        overcome competitive disavanyages
        
        access new markets,technilogies,etc
      - bad reason
        
        principal agent problem
        
        reduce the overall risk for the company
        
        increase diversification
        
        for manager's own personal interest to protect them
        
        managerial hubris
- - - - good at identifying targets
      - buying companis at a relatively low premium,
      - integrating them and creating value from them
    - - Salesforce v.s. Microsoft
        
        Tableau's product is a direct competitor to Microsoft's Power BI software