Online Appendix for Security Design for Private Acquisitions

Abstract

Online Appendix A to Security Design for Asset Acquisitions shows that seller debt securities can be optimal security designs when informed sellers, rather than uninformed buyers, make acquisition offers, and when acquirers are cash constrained. In contrast, acquirer overconfidence and seller private information are essential components of our analysis of seller debt financing. Online Appendix B to Security Design for Asset Acquisition' shows that the ratio condition, Assumption 4, is satisfied by all standard textbook distributions (supported by the non-negative real line) whenever the standard monotone likelihood ratio conditions (Assumptions 1 and 2) of security design are satisfied. The distributions families considered are Chi-Squared, Exponential, Gamma, Gompertz, Half Normal, Lognormal, and Weibull. General sufficient conditions for the satisfaction of Assumption 5 are also developed. The paper is available at https://ssrn.com/abstract=3731086.