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Podcasts & lectures

Acquirers Anonymous: Seven Steps Back to Sobriety (lecture)

Aswath Damodaran · Delivered and updated over many years; 2024 materials current · NYU Stern (lecture materials freely published)

Strategy & readinessValuation & diligenceEvery buyer, once, before every deal, again
Why it is on the shelf. Damodaran’s famous lecture argues from the aggregate evidence that acquisitions are the most reliably value-destructive action a company can take, then prescribes the disciplines of a sober acquirer. The materials are free on his NYU page; recordings of the talk circulate from CFA Institute and university events.

The Institute's reading

Damodaran’s structure is deliberately confrontational: the collective evidence on acquirer returns is poor, the biases that produce overpayment, deal momentum, synergy inflation, adviser incentives, the winner’s curse, are systematic, and so the remedy must be structural too: separate the people who value from the people who negotiate, price synergies skeptically, prefer small and boring, and be willing to walk. The seven steps are a checklist wearing a joke.

The Institute’s reading: he is the loyal opposition to this entire site, and that is exactly why he is on the shelf. The honest synthesis: his aggregate pessimism is drawn largely from public-company acquirers, while this shelf’s Fuller, Netter and Stegemoller entry shows private-target buyers systematically doing better, and his disciplines are precisely how they do it. Assign this lecture to whoever on your team is most in love with the deal.

Key propositions

  • The biases that destroy acquisition value are systematic, so the defenses must be structural, not attitudinal.
  • Separating valuation from negotiation is the single highest-yield process safeguard.

In practice

  • Have someone with no stake in the deal closing own the valuation, and give them a veto worth fearing.

Where authorities disagree

His aggregate pessimism sits in deliberate tension with the private-target evidence elsewhere on this shelf; the Institute keeps both because the pessimism is the reason the private buyer’s discipline works.

Acquisition Conciergeorientation · not legal, tax or valuation advice
Happy to dig into it. What would you like to pressure-test from Acquirers Anonymous: Seven Steps Back to Sobriety (lecture): one of its propositions, how it applies to your situation, or where it disagrees with the rest of the shelf?