Who is paid for what explains behaviour better than any stated intention. Read the incentives first.
In a management buyout the insider is the buyer, so the board's job is to make the market, not take the offer.
Any take-private, management-led bid, or fairness question in M&A and private equity interviews.
From Barbarians at the Gate · 1993
Answer accretion with arithmetic and value with evidence, and never let the first stand in for the second.
Any M&A interview, any accretion-dilution question, and any board case where accretion is offered as the reason to proceed.
From Session 25: Acquisition, a Value Destroyer? · Aswath Damodaran (NYU Stern)
A seller sells certainty of closing as much as price; a bidder who offers more of it can pay less.
M&A process questions, sell-side mandates, and any private equity interview about how to win a deal.
From Barbarians at the Gate · Bryan Burrough and John Helyar
Before weighing advice, work out how the adviser is paid and what that pays them to say.
Evaluating any product, fund or recommendation, and in interviews about asset management economics.
From Where Are the Customers' Yachts? · Fred Schwed Jr.
Follow the incentives through every institution in the chain, including the ones that were supposed to be the check.
When a conversation about a failure stops at the most visible actor, and when assessing any system where the checker is paid by the checked.
From Inside Job · 2010
Ask what would make this fail and who is paid for what before asking anything else.
Diligence, deal structuring, reading any management proposal, and preparing for any decision you cannot easily reverse.
From Poor Charlie's Almanack · Charles T. Munger
Investors as a group earn what businesses earn minus what they pay to helpers; every layer of advice is a claim on that pool.
Asset management economics, the active-passive debate, and any fee discussion.
From Berkshire Hathaway's 2005 letter to shareholders · Warren Buffett