The Price of Control: An empirical investigation of the control premium in M&A transactions, pre and post the financial crisis of 2007/2008.
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University of North Carolina at Charlotte
This paper investigates the control premium in change of control transactions. Ithas taken a large-scale approach to the subject while also adding a pre- and post-crisisperspective. A regression model is built based on financial theory and previous researchon control premiums. The regression model has the control premium as the dependentvariable and explanatory variables that are likely to influence the control premium. Theregression model is applied to two sets of M&A transactions from different time periods:pre-crisis (2000-2004) and post-crisis (2010-2014) as well as the pooled data from bothperiods. The paper finds the control premium is positive and significant and is explainedlargely by the presence of horizontal synergy, between acquirer and target, and is higherin private than public companies. The biggest contribution of this paper is the discoverythat the control premium decreased by 22.47% after the great recession compared tobefore the crisis. Two discoveries in particular are worth mentioning. First, during thefinancial crisis the control premium fell much more drastically in the US-Canada regionthan in the rest of the world. Second, the control premium on private companies hasalmost tripled in size post-crisis.
Depken II, Craig
Clark, StevenIqbal, Azhar
Thesis (M.S.)--University of North Carolina at Charlotte, 2015.
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