30 micro

The board of directors ofa convany consists of five nrmbers. One member is the founding president who is looking for a way to keg) the company intact Her first preference is to initiate a poison-pill provision into the convany chafer. The poison pill would be designed to prevent any outside party from attaining control wlthout board approval The two young members of the board that the situation is more desperate Tlry believe that a takeover IS inevitable and are concentrating on finding a way to make the present transaction more acceptable Their preferred action is to look for a white knight, a buyer who is acceptable to mamgement and the board. The fourth nrmber, who represents the management, suggests a third possibility. The present nunagers would like the opportunity to buy the conpany through a management buyout, an MBO_ The fifth member of the board is an outside director. He is cautiously optimistic about the present raider and argues that there is tme to see how the offer develops. After these four options have been discussed at length, everyone ends up with a clear picture of where the others stand on the four propsals. The conplete set of preferences is presented below. (best) 2Ld 4th (worst) Founder's Poison Pill White Knight Wait & See Two Young Directors ' ranking Whlte Knight Poison Pill Wait & See Management ' s ranking Poison Pill Wait & See unlite Knight Outside Director' s Wait & See Wlite Knight Poison Pill They decide that there is a natural order to the decision-making process: begin by comparing an NBC) wffh a uhlte Knight; the chosen altermtlve is then compared with the Polson Pill optlon_ Haling found the best active response, they decide whether this IS worth doing by convaring it to Wait & See. The votmg procedure represented by the tree below.