Project

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New Evidence and Perspectives on Takeovers in Europe

Applicant Salva Carolina
Number 135376
Funding scheme Project funding (Div. I-III)
Research institution Institut d'analyse financière Université de Neuchâtel
Institution of higher education University of Neuchatel - NE
Main discipline Science of management
Start/End 01.08.2011 - 31.07.2014
Approved amount 167'680.00
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Keywords (8)

Mergers & Acquisition; Valuation; Private equity; Financial development; Euro; EMU; Cost of capital

Lay Summary (English)

Lead
Lay summary
This project is divided in two parts. In the first part, the objective is to evaluate the impact of the introduction of the Euro on prices paid for European firms taken over, on acquisition premia and on private enterprise discounts. The second part examines the role of private equity funds in the takeover market by looking at how their activities and results differ from those of other participants such as operating firms.

Regarding the first part, existing literature shows that the introduction of the euro led to increases in the value of public companies incorporated in participating countries. In this project, we will test if the introduction of the euro has had a similar impact on the acquisition prices paid in takeover deals and whether and to what extent it has affected the private firm discounts. For example, if the EMU has significantly impacted the liquidity of the takeover market, then we would expect to see lower private firm discounts. Specifically, building on previous literature we will use acquisition multiples in order to estimate possible takeover price changes and will aim to explain any findings. Then we will test if the acquisition price potential change around the introduction of the common currency is different for public versus private targets. With this analysis, we will gain additional insight on the broad impact of the introduction of monetary unions on the value of firms, both public and private, on the cost of financing and on the liquidity and competitiveness of the market for corporate control.

Regarding the second part, existing studies show that private equity funds tend to enjoy superior performance than other market participants. We know that non-operating firms usually do not have significant synergies with their targets and pay lower premia than listed operating companies. In this study, we will evaluate the potential sources of their continued success by comparing their acquisition behavior, who they buy and when they buy, vis-à-vis other takeover market participants (listed operating firms). More specifically, for example, we will evaluate whether the differential performance bidding firms, private equity funds versus public operating firms, depends on how they time their acquisitions with respect to merger waves.
Direct link to Lay Summary Last update: 21.02.2013

Responsible applicant and co-applicants

Employees

Name Institute

Publications

Publication
Etude de l'évaluation indépendante des cibles d'offres publiques d'achat
Olivier Thérèse, Schatt Alain, Etude de l'évaluation indépendante des cibles d'offres publiques d'achat, in La Revue Française de Gouvernance d'Entreprise.

Collaboration

Group / person Country
Types of collaboration
Prof. Alain Schatt, HEC Lausanne Switzerland (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Publication

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
Neuchatel Research Seminar Individual talk Do private equity firms really offer lower premiums in M&As than strategic acquirers? 07.06.2013 Université de Neuchatel, Switzerland Salva Carolina; Olivier Thérèse;
Congrès International de Gouvernance Talk given at a conference Expertise indépendante et évaluation des cibles d'offres publiques d'achat: le cas français 01.05.2013 Audencia Nantes, Ecole de Management, Nantes, France Olivier Thérèse;
Neuchatel Research Seminar Individual talk Expertise indépendante et évaluation des cibles d'offres publiques: le cas français 01.06.2012 Université de Neuchatel, Switzerland Salva Carolina; Olivier Thérèse;


Abstract

Over the last two decades, the European takeover market has experienced significant growth and has been exposed to major changes such as the introduction of the euro and the rising participation of financial investors (i.e. private equity funds). In the first project, we will study the impact of the introduction of the Euro on prices paid for European targets, on acquisition premiums and private enterprise discounts to learn how and through which channels monetary unions impact firm values. In the second project, we examine the role of private equity funds in the takeover market by looking at how their activities and results differ from those of other participants such as operating firms. Existing studies show that private equity funds tend to enjoy superior performance than other market participants. Thus, our experiment will bring some insight on the sources of their continued success.
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