Welch and colleagues synthesize the fragmented research on deal initiation, target selection, bidding and negotiation, valuation and financing, announcement, and closure. Two findings deserve an owner’s attention: the documented power of executive motives, compensation, status, overconfidence, in starting deals that should not start; and the field’s candid admission that due diligence, the phase practitioners treat as decisive, is surprisingly under-researched, with efforts that frequently fail to detect negative information about the target.
The Institute’s reading: this is the academic backbone for the site’s heaviest emphasis: the decisions before the letter of intent are where value is won or lost, and the pressures that corrupt them are systematic rather than personal. The escalation dynamics it documents, commitment building as processes accelerate, are exactly what the Readiness Diagnostic’s motive questions and the five-day-LOI judgment line exist to interrupt.