We propose a model of due diligence and analyze its effect on prices, payoffs, and deal completion. In our model, if the seller accepts an offer, the winning bidder (or “acquirer”) can gather information and chooses when to complete the transaction. In equilibrium, the acquirer engages in “too much” due diligence. Our quantitative results suggest that the magnitude of the distortion is economically significant. Nevertheless, allowing for due diligence can improve both total surplus and the seller's payoff compared to a setting without due diligence. We use our framework to explore the timing of due diligence, bidder heterogeneity, and breakup fees.

中文翻译：

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尽职调查

我们提出了尽职调查模型，并分析了其对价格、回报和交易完成的影响。在我们的模型中，如果卖方接受报价，中标者（或“收购方”）可以收集信息并选择何时完成交易。在均衡状态下，收购方进行了“过多”的尽职调查。我们的定量结果表明，扭曲的程度具有重大的经济意义。然而，与没有尽职调查的情况相比，允许尽职调查可以提高总盈余和卖方的收益。我们使用我们的框架来探索尽职调查的时间安排、投标人的异质性和分手费。