Learning to Negotiate Takeovers? The Role of Target CEO Experience

Does a CEO's experience with mergers matter when her firm becomes a takeover target? We find that shareholders receive higher premiums when their CEO has experience. The evidence suggests this is due to learning rather than innate skills or selection. Consistent with superior negotiation of salient features of takeover offers, experienced target CEOs obtain either safer cash payments or higher premiums as the fraction of cash in the offer decreases. These benefits do not come at the cost of other contractual concessions or inefficiencies in takeover negotiations. Overall, M&A experience is valuable when the CEO's firm becomes a takeover target