Abstract
We study the determinants of takeover duration. We focus on
bidder-initiated, one-to-one negotiations. As time goes on, both
parties learn about true deal synergies due to the negotiation
process. At any moment, rival bidders can show up and compete
for the target. Using a discrete time finite horizon dynamic
programming approach, we study the equilibrium relations
between the negotiation duration, the pressure of potential
competition and the learning process. Next, we perform a
calibration exercise based on a large sample of merger
negotiations with hand-collected data from SEC filings. Our
results allow to quantify the intensity of potential competition.