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M&A Outcomes and Willingness to Sell

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  • Eric De Bodt
  • Jean-Gabriel Cousin
  • Irina De Bruyne Demidova

Abstract

Should target shareholders divulgate their willingness to sell (WTS)? In this article, we tackle this issue by investigating the net WTS wealth effect. We first model the trade-off between the probability of a sale and the price paid in case of a sale, and derive testable predictions. We then provide an empirical test using a proxy of the target?s WTS based on deal initiation and the chosen selling procedure, which are hand-collected in Securities and Exchange Commission filings. The results reveal a negative relationship between the target?s displayed WTS and its expected profits, mitigated by competition among acquirers.

Suggested Citation

  • Eric De Bodt & Jean-Gabriel Cousin & Irina De Bruyne Demidova, 2014. "M&A Outcomes and Willingness to Sell," Finance, Presses universitaires de Grenoble, vol. 35(1), pages 7-49.
    • Handle: RePEc:cai:finpug:fina_351_0007
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    Cited by:

    1. Zha Giedt, Jenny, 2016. "Economic Consequences of Announcing Strategic Alternatives," MPRA Paper 81356, University Library of Munich, Germany, revised 10 Sep 2017.
    2. Aktas, Nihat & Baros, Aleksandra & Croci, Ettore, 2022. "Corporate divestitures around acquisitions," Journal of Corporate Finance, Elsevier, vol. 73(C).
    3. Fidrmuc, Jana P. & Xia, Chunling, 2019. "M&A deal initiation and managerial motivation," Journal of Corporate Finance, Elsevier, vol. 59(C), pages 320-343.

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