ECM bankers thrive on M&A boom
THE CLASSIC M&A arbitrage strategy – you hold the stock of a target company and short that of a bidding company – evolved for good reasons. The target’s share price should always be expected to rise because if you try to buy a company you will have to pay a premium in order to gain control. The bidder’s share price has good reasons to fall: the bidding company takes on the risks of trying to execute a plan to turn one plus one into more than two.
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