E) @ dfglpdfpdf x + d x G (3' Archive C:/Users/A|Iison%20Al\\/arez/Downloadsy'dfgifpd'fpdf a {o is; "I 23de +EII3A\"-Vv'av<_>@ 32533 Machine rrarmueu by Goggle Case 3: The threat of acquisition and the subsequent change of the management team has been considered as a discipline mechanism for management. which induces efcient management and. therefore. to maximize the benefit of the company (understand by benefit the present value of the cash ow future benets). Let B be the benefit that the company now obtains. If stock investors have the expectation that the current management will continue in the future. the capitalization of the company will be equal to Bfr (future earnings discounted at rate r. discount rate). Let B\" be the maximum profit of this company. To obtain control of the company and. therefore, to be able to re the current management team and replace it with an efficient team that leads to B". a ponion y of the company's capital is needed. Formulate the condition that expresses the potential benet of a \"raider" (individual or company interested in obtaining control of a company). Interpret the result. Often, however. buying a company generates higher costs than just buying shares. In particular. old managers can use defensive practices (\"golden parachutes". \"poison pills\". etc.) to hinder the work of \"raiders\" and consolidate their position. Reformulate the above condition by including some defensive costs of C (consider them xed). An additional problem is that shareholders may engage in \"opportunistic" behavior. Suppose that to gain control. M shares are needed, where N is the total number of shares (M<>