An Incentive-Compatible Alternative to “Don’t Ask Don’t Waive” Standstills

In a recent essay forthcoming in the Delaware Journal of Corporate Law (available on SSRN), we argue that the current controversy over “Don’t Ask, Don’t Waive” standstills in M&A practice highlights the need to apply mechanism design to change-of-control transactions.[1]  Mechanism design is a Nobel Prize-winning theory based on incentive compatibility, whereby algorithmic procedures render it in the parties’ interests to be forthcoming, or truthful about their “bottom lines,” rather than relying exclusively on ex-post enforcement.

A.  The Tension Between Deal Certainty and Value Maximization in M&A Transactions

In M&A auctions, the board’s duty to maximize … Read more

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Editor's Tweet: NYU's Professor Steven J. Brams discusses An Incentive-Compatible Alternative to “Don’t Ask Don’t Waive” Standstills