You Can’t Change Your Mind About Mergers

The way that public company mergers work is mostly that the executives of one company (the buyer) negotiate a deal with the executives of another company (the target), and then the board of directors of the buyer and the board of directors of the seller both approve the deal, and then the merger agreement is signed and the deal is publicly announced, and then the shareholders of the target get to vote on whether to take the deal. The shareholders of the buyer, though, usually don’t get to vote. The target is going to disappear, and its shareholders will be cashed out; they get some say in the matter. The buyer is just doing a business deal, which its executives and directors are generally allowed to do; nothing fundamental is changing for its shareholders, so they don’t get a say.1

But a big acquisition can be pretty fundamental for the buyer, and its shareholders might have some complaints. If they’re really mad, what can they do about it? Well, the theoretical answer is something like: