Conventional wisdom holds that equity misvaluation reduces mergers and acquisitions (M\&A) efficiency by stimulating market timing. We show that this conclusion overlooks a critical dimension: the persistence of misvaluation. We develop and estimate a real options model in which persistent misvaluation reduces bidders' urgency to exploit the financing window, shifting incentives back to deals with stronger fundamental synergies. Overvaluation boosts merger activities but lowers deal quality. In the estimated economy these two effects approximately cancel, keeping aggregate M\&A value creation close to the no-misvaluation benchmark. This balance, however, hinges on persistence: transient, large-scale misvaluation can be sharply detrimental, while mild, persistent misvaluation can even push aggregate M\&A value creation \textit{beyond} the no-misvaluation benchmark. Price inefficiency, in this sense, can enhance real efficiency.