Hacker Newsnew | past | comments | ask | show | jobs | submit | tam123---'s commentslogin

The point poorly expressed is that public markets transactions are highly scrutinised, and it is easy for shareholders to be highly litigious toward the directors.

The directors therefore have a strong incentive to only accept offers at a normal premium to current price, which seems to be about 30% by back of the cigarette packet maths.

Bidders therefore have an incentive to bid around 30% so their bids are more likely to be accepted.

The key thing is an incentive to avoid liability and get deals done. If the equilibrium was 80% then bids would be all at 80% and there would be less of them.


unrelated, i'm trying to figure out where the phrase "back of the cigarette packet math" is more common than saying "back of the napkin math".


Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: