Mergers frequently don’t work, failing to generate anticipated synergies. The winner in any merger is usually the one willing to pay the most, and that frequently means overpaying. This is known as the winner’s curse. Assuming that each bidder has the same information and values something the same, for one bidder to win it means they’re paying more than similarly-situated bidders were willing to. And there’s a strong likelihood that means paying too much. In the case of Marriott, they weren’t necessarily the high bidder for Starwood, Hyatt’s bid was deemed to complicated because of the chain’s multiple share classes.

Read the full article at View From the Wing