Negotiating M&As under uncertainty: The influence of managerial flexibility on the first-mover advantage

Using a dynamic real options approach we show that managerial flexibility is strengthening the first-mover advantage in bargaining M&As by undermining the bargaining power of the second mover.

► We model a sequential bargaining game of an M&A by means of real options. ► We show that in general a first-mover advantage prevails. ► Increasing interest rates will reduce the first-mover advantage. ► Managerial flexibility is undermining the bargaining power of the second mover. ► Therefore, the first-mover advantage is reinforced by managerial flexibility.