Employing lesser-known corporate development strategies while avoiding problematic blind spots

Abstract

Purpose All too often M&A deal making falls into the trap of head-to-head competition that drives valuations to “sky-high” levels. The author suggests ways to avoid the trap. 10; 10; 10; Design/methodology/approach Four lesser-known corporate development strategies offer lucrative alternatives to engaging in an M&A bidding war. Findings One strategy: The derivatives market allows executives to acquire financial products to hedge their material balance sheet exposures when market pricing is incredibly low. Practical/implications Relatively few acquirers make initial “toehold” investments in their targets prior to making a bid. Originality/value The strategic logic of hyper-efficient resource utilization has rarely been popular, despite how “obvious” it may initially appear. Most executives seem psychologically oriented to a growth-based approach irrespective of the risks that approach may generate over time. 10;