CHAPTER 4Real Options in M&A

Back to the future.1

We discuss M&A as a tool of strategy throughout this book. Certainly any major deal will have strategic importance and will be accompanied by commensurate strategic risk. However, a single deal seldom comprises the entire strategy. Strategies usually involve several steps, often with each step depending on the one before. Such strategies can be further complicated if subsequent steps also depend on factors unknowable in advance.

In such cases, the strategic thinking moves from checkers to chess. Consider a simple example: the acquisition of land with precious metal deposits, say gold. The postdeal steps would be to fully assess the locations and richness of the deposits and then to develop the ...

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