Kenneth R. Ferris, Barbara S. Pécherot Petitt
Valuation - Avoiding the
Winner's Curse
 Kenneth
Ferris and Barbara Pécherot Petitt are both Professor at Thunderbird, The
American Graduate School of International Management and also work as
valuation, mergers and acquisitions consultants. Their book "Valuation,
Avoiding the Winner's Curse" is about valuation especially in Mergers &
Acquisitions situations. The book explains methods including
Economic Value Added and Real
Options and also contains a chapter on
accounting dilemmas and one on
financial reporting and tax considerations in M&A.
Five principal reasons
for the destruction of merger and acquisition value are given:
1. Overestimation of
target firm growth and/or market potential,
2. Overestimation of
expected cost and/or revenue synergies,
3. Overbidding,
4. Failure to
undertake a thorough due diligence,
5. Failure to
successfully integrate an acquiree after the merger or acquisition.
This book on mergers and acquisitions
valuation is recommended reading
for both senior executives planning a merger or acquisition and for
valuation analysts.
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