Monday, February 18, 2008

A Time To Act 2

Delaying a decision may simply involve holding out for a better offer. For example, when the directors of a company reject a take-over bid, claiming (as they always do) that it significantly undervalues the company.

It would be wrong to take the first offer that is made, if there is a reasonable chance of holding out for more. But on the other hand, if you wait too long for a higher offer, you may lose out.

In a post entitled Logic Need Not Apply, Microsoft employee John Evdemon comments on the refusal of Yahoo directors to accept a take-over bid from Microsoft. Is this simple greed, he asks, or are the Yahoo directors allowing their emotions to rule their heads? In asking this question, John is not just influenced by his current affiliation with Microsoft, but also with a startup company he was involved with previously, whose directors turned down a high offer and were subsequently forced to accept a much lower offer.

According to the New York Post (via Computerworld, Feb 15th 2008), there is a split in the Yahoo board, with some directors advocating acceptance. There is a threat of shareholder lawsuits if the directors could be proved to have acted emotionally, rather than in the best interests of shareholders. But how could this ever be proved?

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