Merger Arbitrage, 2nd Edition

Preface

Since the first edition of this book interest rates have fallen to near zero and have dragged returns on merger arbitrage with them. With the foreseeable end of the Federal Reserve's zero interest rate policy it is likely that investors will allocate to merger arbitrage again in the near future. This book is written as a guide to potential investors who seek to understand the strategy better prior to committing an investment, investors who may have an allocation to merger arbitrage through model portfolios or maybe even their pension plan, as well as aspiring arbitrageurs.

Merger arbitrage, also known as risk arbitrage, has grown exponentially since the 1980s from small operations within Wall Street firms to standalone arbitrage funds directly accessible to the public. Yet, surprisingly little has been written on the topic. A number of academics have written studies about various aspects of the strategy. For the general public, I can count only six books on the topic. This small number pales in comparison to the information overload that other areas of finance experience. Since Guy Wyser-Pratte's two monographs in the 1970s, only three other books about merger arbitrage have been published. One of them is Ivan Boesky's Merger Mania. Maybe potential writers fear that authoring a merger arbitrage book stands under a bad omen because Boesky was arrested a few weeks after the publication of his book. As the author of a merger arbitrage book, I certainly hope that writing ...