

Austan Goolsbee to Head the CEA - billswift
http://www.theatlantic.com/business/archive/2010/09/austan-goolsbee-to-head-the-cea/62784/

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billswift
Interesting comment in the article on the AOL/TimeWarner deal and on
acquisitions in general. For example,

 _What price will the owner be willing to sell the asset at?

The answer, of course, is that he will be willing to sell the asset for the
present value of all the future exorbitant fees he's planning to charge you,
less a discount because it's nicer to get all the money now in a big pile,
rather than in dribs and drabs over the years.

Assuming that your discount rate is approximately the same as that of the
asset's owner, you can easily see that it is impossible to make money off the
transaction; you'll just be giving him the money now, rather than later. The
discount you receive for your troubles will probably be about equal to your
borrowing costs, plus the lower liquidity you get from owning, rather than
renting, an asset._

