Selling Assets: Are Sellers Better Off with Strong Buyers?
Robert Marquez () and
Rajdeep Singh ()
Additional contact information
Robert Marquez: University of California at Davis, Davis, California 95616
Rajdeep Singh: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Management Science, 2024, vol. 70, issue 9, 5731-5752
Abstract:
When do sellers benefit from the presence of a strong buyer? In a second price auction with independent private values and entry costs for buyers, we allow for one buyer to be stochastically “strong.” We show that, when buyers make positive net profits, seller revenue is higher with a stronger buyer. In contrast, when competition is endogenous so that all buyers other than the strong buyer break even, seller revenue is always lower in the presence of a strong buyer. We also study seller actions such as providing buyer subsidies, setting reserve prices, securing multiple strong buyers, bundling assets, and optimally choosing the time of sale that might alleviate the fall in revenue.
Keywords: asset sales; mergers and acquisitions; asymmetric auctions; endogenous entry (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2023.4938 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:9:p:5731-5752
Access Statistics for this article
More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().