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

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.