The Synergy Trap, Asia-Pacific Edition

Excellent scholarly work. Control premiums are assumed and not supported by empirical evidence. The Synergy Trap is packed with statistical evidence to support the enfluence of the auction or "bidding" process that heavily enfluences stock prices during acquisitions and takeovers.

Mark L. Sirower's thought-provoking and complex book is actually a critically acclaimed academic study that challenges the reasoning behind corporate acquisitions. Pointing out that acquisitions usually devalue the acquiring companies (a loss from which they rarely recover), Sirower delves into management fundamentals and mathematical analyses to get to the bottom of merger and acquisition problems. Three detailed appendices feature plenty of financial calculations, performance measures and data from various corporate acquisitions to back up his assertions. We [...] recommend this book to those involved in mergers and acquisitions and to other readers intrigued by the inside view of this "carnivorous quest."

Dr. Sirower does a remarkable job in showing how easy it is to lose the acquisition game by failing to define synergy in terms of real, measurable improvement in competitive advantage. By analysing the acquisition premium with his Required Performance Improvement (RPI) formula, Dr. Sirower shows how to determine in advance when the price is far above the potential value of an acquisition. The way managers who analyse the acquisition premium and concept of synergy can avoid to get caught and how to predict the probability of shareholder losses or gains (although the probability formula is not flawless). Regardless the good work done by Dr. Sirower, I wouldn't be surprised if M & A professionals don't like the book because of its highly critical approach to synergie effects.