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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Dietz, D. (2015). The Price of Control: An empirical investigation of the control premium in M&A transactions, pre and post the financial crisis of 2007/2008. Unc Charlotte Electronic Theses And Dissertations.
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Abstract

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.

Details
Author

Dietz, David

Title

The Price of Control: An empirical investigation of the control premium in M&A transactions, pre and post the financial crisis of 2007/2008.

Physical Description

1 online resource (91 pages) : PDF

Date

2015

Degree Granting Institution

University of North Carolina at Charlotte

Abstract

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.

Genre

masters theses

Subjects--Topics

Finance
Economics

Degree

M.S.

Keywords

Acquisition
Control
Crisis
Financial
Mergers
Premium

Subject Area

Economics

Advisor(s)

Depken II, Craig

Committee Members

Clark, Steven
Iqbal, Azhar

Degree Note

Thesis (M.S.)--University of North Carolina at Charlotte, 2015.

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Rights Holder Information

Copyright is held by the author unless otherwise indicated.

Identifier

Dietz_uncc_0694N_10845

Permalink

http://hdl.handle.net/20.500.13093/etd:1285