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| Yuta Motoyama |
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| ''Dynamic M&A strategy: Modeling optimal acquisition timing using Brownian motion'' |
| ( 2025, Vol. 45 No.2 ) |
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| This paper investigates the optimal strategy for mergers and acquisitions (M&A) within corporate finance. We assume that two role model companies significantly influence the effort levels of other companies. As the effort level affects a company's future rate of return, we model this rate using Brownian motion to determine the optimal timing for M&A. Through this approach, we derive the optimal M&A strategy, specifying when and how much to acquire. Two illustrative examples are provided to demonstrate constructive acquisition strategies. This research contributes to the literature by offering a theoretical framework that optimizes M&A strategy, particularly regarding acquisition timing and scale, in a stochastic environment. |
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| Keywords: Effort level, Brownian motion, Critical threshold, Optimal timing |
JEL: G3 - Corporate Finance and Governance: General
C6 - Mathematical Methods and Programming: General |
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| Manuscript Received : Nov 28 2024 | | Manuscript Accepted : Jun 30 2025 |
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