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buying companies can get so excited

about beating out their competitors

that they ignore signs that they’re overpaying.

This happens so frequently that

it has a name: “deal fever,” followed by

“the winner’s curse.” The AOL–Time

Warner merger, which wiped out $200

billion of Time Warner shareholder

value, is a classic example. There were

plenty of warnings that AOL’s stock,

which was the currency for the merger,

was wildly overvalued, yet Time

Warner’s directors approved the deal

unanimously.

“I did it with as much or more excitement

and enthusiasm as I did when I

first made love some forty-two years

ago,” exclaimed Ted Turner, one of

those directors and the largest individual

shareholder in the company. “TED

TURNER: IT’S BETTER THAN SEX,” announced

the New York Post the day

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