Book Review: ‘Deals’ by Michael Klausner and Guhan Subramanian

Unlocking Value: The Art and Economics of Dealmaking

Book Title: Deals: The Economic Structure of Business Transactions
Author(s): Michael Klausner and Guhan Subramanian
Publisher: Harvard University Press
Number of Pages: 176
ISBN: 978-0674297623
Date Published: May 2, 2024
Price: INR 394

Deals by Michael Klausner and Guhan Subramanian Book Cover

Book Review

In “Deals: The Economic Structure of Business Transactions,” Michael Klausner and Guhan Subramanian delve into the complicated world of business transactions, giving a comprehensive yet comprehensible guide aimed at maximizing value for all stakeholders. Drawing on a plethora of real-life cases spanning multiple industries, from corporate mergers to high-profile contract disputes, the authors distill decades of experience teaching and advising on business transactions into a rigorous framework focused on designing incentives, effectively communicating information, and clearly defining rights and obligations.

Klausner and Subramanian explain the difficulties of dealmaking by using vivid case studies such as Microsoft’s acquisition of LinkedIn and Scarlett Johansson’s contract dispute with Disney. They also define essential negotiating rules and economic ideas necessary for value maximization. They address common issues like as information asymmetry, moral hazard, and opportunistic behavior, emphasizing the importance of carefully considering exit alternatives early in transaction design to prevent the hazards associated with long-term contracts.

This book stands out for its practical application of economic theory to real-world dealmaking scenarios, making it an invaluable resource for students and professionals in the business and legal professions. Whether readers are new to business or law school, seasoned financial specialists, or simply interested in the mechanics of high-profile deals, “Deals” gives vital insights into the underlying economic structures that drive successful negotiations.

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Klausner and Subramanian persuasively illustrate that ideal dealmaking is more than just zero-sum games, asserting that experienced transactional professionals may create value through strategic structuring and negotiating. By studying a variety of circumstances and applying basic economic principles to comprehend them, the authors produce a theoretically rich yet practical guide that will appeal to both practitioners and scholars, promoting further development of dealmaking theories.

In the book authors Klausner and Subramanian explore corporate contracts and offer a theoretical framework that may be used for a wider variety of business transactions, not simply mergers involving public companies. The writers talk about the challenges of drafting contracts that take the unpredictability of shifting economic relationships into account, whether they are joint ventures or long-term partnerships.

Finally, “Deals” emphasizes the intentional ambiguity that is occasionally inherent in contract design while equipping readers with the knowledge and skills necessary to navigate the complexities of contemporary dealmaking. It does this by providing in-depth discussions on earnouts and contingent value rights.

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