Acquisitions: Private versus Public

By P. Draper, Krishna Paudyal. 2006

183 citations recorded by the source corpus.

Takeovers of privately held companies represent more than 80% of all takeovers. Despite their significance, studies of such takeovers and their impact on the wealth of shareholders are rare. Using a very large, near exhaustive, sample of listed and privately held UK targets we examine the impact of such takeovers on the risk adjusted return of listed UK acquirers over the period 1981 to 2001. Acquirers earn significant positive returns during the period surrounding the bid announcement although the gains are dependent on target status, mode of payment, and the relative size of those involved. The much quoted conclusion, derived from the experiences of listed firm bidders that the shareholders of acquiring firms fail to gain from takeovers, cannot be generalised. Acquiring a privately held company is an attractive option for maximising shareholder wealth.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/767a15290e23ec69a4b5581dbc94b8eaff9a7104

Citations in the corpus

• Gains from Mergers and Acquisitions Around the World: New Evidence (2010, unknown): “…covering the U.K. and U.S. markets, document that transactions conducted solely with cash are at least non-value destructive, while acquirers offering equity to finance acquisitions suffer extensive losses (Travlos, 1987 and Walker, 2000, for the U.S. and Draper and Paudyal, 2006 for the U.K.).”