Lifecycles and the Firm

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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2 Responses

  1. Ben says:

    This isn’t Smith v. Van Gorkom at all!

    The problem isn’t that older CEOs are giving the company away for peanuts to “cash out.” It’s more along the lines of: young target-company CEO evades a cost-justified merger that is worth a lot to shareholders, but not a lot to her given how much she values staying remains at the helm for a while.

    And how could it be otherwise- retirement-age CEOs, like shareholders, don’t care at all about a change in control but for the control premium, ie, they’ll both take a deal if it values the company higher than current trading (assuming the retirement-age CEO owns shares).

  2. Lee says:

    Perhaps the younger CEO requires an “unreasonable” premium to yield control of the company to another. It’s also possible that an older CEO has no succession plan in place and a merger solves the problem.