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The evolution of bidder gains and acquisition discounts in M&A

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  • Meng, Yun
  • Sutton, Ninon

Abstract

While the gains to acquirers in public mergers and aquisitions (M&A) tend to be small or non-existent, acquirers of unlisted targets have been a notable, robust exception. Prior studies often point to an illiquidity discount as the reason why these non-public targets are good deals for acquirers. This paper examines acquirer wealth gains and bid premia in M&A involving unlisted/listed firms over the past three decades. Our findings show that, while target listing status was a significant determinant of acquirer wealth gains and bid premium in early years, it no longer has significant shareholder wealth implications for either acquirers or targets in M&A. These results are consistent with recent studies that suggest a changing landscape in the public funding markets and an increased availability of alternative funding sources for unlisted firms.

Suggested Citation

  • Meng, Yun & Sutton, Ninon, 2022. "The evolution of bidder gains and acquisition discounts in M&A," Journal of Banking & Finance, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:jbfina:v:143:y:2022:i:c:s0378426622001704
    DOI: 10.1016/j.jbankfin.2022.106574
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    More about this item

    Keywords

    M&A; Illiquidity discount; Unlisted target; Bid premimum; Acquirer return;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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