Hidden Risk In Merger Arbitrage – Deal Extension Risk
Hidden Risk In Merger Arbitrage – Deal Extension
The principal risk associated with a merger arbitrage (risk arbitrage) strategy is the risk of deal failure. But how many traders are aware of ANOTHER important risk element? Deal Extension risk, sometimes referred to as Delayed Deal Completion Risk is also present. The length of time a deal takes to complete can have a dramatic effect on the annualised returns of this strategy.
