Thomas Kirchner

Merger arbitrage has fascinated investors ever since it gained prominence in the 1980s through the disgrace of Ivan Boesky. In this presentation, Mr. Kirchner draws on his experience as manager of a merger arbitrage strategy to explain the mechanics of cash or stock-for-stock mergers and the principal risks and benefits of merger arbitrage. The presentation discusses the asymmetric risk profile of merger arbitrage along with its historical returns and correlations, showing how portfolios benefit from adding merger arbitrage to reduce volatility. Finally, with the recent drop in merger activity, it asks whether and for how long merger arbitrage is dead in low-interest rate environments.