How Are Firms Sold?

As measured by the number of bidders that publicly attempt to acquire a target, the takeover arena in the 1990s appears noncompetitive. However, we provide novel data on the pre-public, private takeover process that indicates that public takeover activity is only the tip of the iceberg of actual tak...

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Bibliographic Details
Published in:	The Journal of finance (New York) 2007-04, Vol.62 (2), p.847-875
Main Authors:	BOONE, AUDRA L., MULHERIN, J. HAROLD
Format:	Article
Language:	eng
Subjects:	Acquisitions & mergers Auctions Bidders Bids Business structures Business studies Cash Competition Economic activity Economic analysis Economic networks Linear regression Livestock auctions P values Shareholders Stock prices Studies Take-overs Target company Tender offers Value weighted index Wealth effect
Online Access:	Get full text
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Summary:	As measured by the number of bidders that publicly attempt to acquire a target, the takeover arena in the 1990s appears noncompetitive. However, we provide novel data on the pre-public, private takeover process that indicates that public takeover activity is only the tip of the iceberg of actual takeover competition during the 1990s. We show a highly competitive market where half of the targets are auctioned among multiple bidders, while the remainder negotiate with a single bidder. In event study analysis, we find that the wealth effects for target shareholders are comparable in auctions and negotiations.
ISSN:	0022-1082 1540-6261