« Valuation - Round I | Main | Valuation Round II - Intelligence vs. Data »

February 06, 2006


Lorne Groe

Well, Daniel makes a good point that acquirers often try to ban short sales by sellers after the deal closes. The problem is that if you don't let sellers hedge, you've put yourself in the position of having to give price protection. Or worse yet, the acquirer puts itself in position for litigation by restricting hedging activity if the stock price then falls. I've seen this outcome a number of times. The best bet for both sides is an upfront conversation about expectations and understanding the ability to and impact of hedging.


I would try to restrict hedging activity against my public stock as an acquirer if there are big blocks that will need to be hedged. If I couldn't totally restrict it, I would try to attach some conditions to the hedge.

The comments to this entry are closed.