Identify and discuss six rules that firms bidding on a target firm in an acquisition should follow ...

 In pursuing an acquisition, there are six rules that firms bidding on a target firm should follow to increase the possibility that the target firm will earn superior performance. These rules are:
 Search for valuable and rare economies of scope. Bidding firms should seek to acquire targets with which they enjoy valuable and rare linkages. Operationally, the search for rare economies of scope suggests that managers in bidding firms need to consider not only the value of a target firm when combined with their own company, but also the value of a target firm when combined with other potential bidders. This is important because it is the difference between the value of a particular bidding firm's relationship with a target and the value of other bidding firms' relationships with that target that defines the size of the potential economic profits from an acquisition.
 Keep information away from bidders. One of the keys to earning superior performance in an acquisition strategy is to avoid multiple bidders for a single target. One way to accomplish this is to keep information about the bidding process, and about the sources of economies of scope between a bidder and target that underlie this bidding process, as private as possible.
 Keep information away from targets. Unless it is illegal to do so, bidding firms must not fully reveal the value of their economies of scope with a target firm.
 Avoid winning bidding wars. If a number of firms bid for the same target, the probability that the firm that successfully acquires the target will gain competitive advantages is very low. Therefore, it is to a bidding firm's advantage to avoid a bidding war.
 Close the deal quickly. All the economic processes that make it difficult for bidding firms to earn economic profits from acquiring a strategically related target take time to unfold. It takes time for other bidders to become aware of the economic value associated with acquiring a target; it takes time for the target to recruit other bidders; information leakage becomes more of a problem over time; and so forth. A bidding firm that begins and ends the bidding process quickly may forestall some of these processes and thereby retain some superior performance for itself from an acquisition.
 Operate in thinly traded acquisitions markets. A thinly traded market is a market where there is only a small number of buyers and sellers, where information about opportunities in this market is not widely known, and where interests besides purely maximizing the value of a firm can be important. In the context of mergers and acquisitions, thinly traded markets are markets where only a few (often only one) firms are implementing acquisition strategies. These unique firms may be the only firms that understand the full value of the acquisition opportunities in this market. Even target firm managers may not fully understand the value of the economic opportunities in these markets, and even if they do, they may have other interests besides maximizing the value of their firm if it becomes the object of a takeover.