Just Enough or All: Selling a Firm

Mehmet Ekmekci (), Nenad Kos and Rakesh Vohra

American Economic Journal: Microeconomics, 2016, vol. 8, issue 3, 223-56

Abstract: We consider the problem of selling a firm to a single buyer. The buyer privately knows post-sale cash flows and the benefits of control. Unlike the case where buyer's private information is one-dimensional, the optimal mechanism is a menu of tuples of cash-equity mixtures. When the seller wants to screen finely with respect to the private benefits, he makes an offer for the smallest fraction of the company that facilitates the transfer of control. When he wants to screen finely with respect to cash flows, he makes an offer for all the shares of the company.

JEL-codes: D21 D82 G32 G34 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20140143
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Citations: View citations in EconPapers (6)

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Working Paper: Just Enough or All: Selling a Firm (2013)
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