Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Do leaks imperil M&A deals? IntraLinks and Cass study indicates leaked deals cost time and money

17.06.2008
A new research study, ‘M&A leaks: Issues of information control, commissioned by IntraLinks, the leading provider of online workspaces, and conducted by Cass, has revealed that less than half (49%) of all leaked deals complete, compared to 72% of non-leaked deals.

In what is thought to be the world’s first research focused on pre-announcement market leaks in M&A, Cass established a universe of over 350,000 M&A deals between 1994 and 2007, and then using rigorous search criteria distilled the number of deals that had been disclosed in the press prematurely.

The exhaustive research project cast light on the sensitivities inherent within M&A activity and the destabilising effect a press leak could have on the deal process – revealing that whilst 97% of non-leaked deals are classified as friendly* this figure drops to 80% where there are instances of an identifiable leak.

The study showed that both the target and bidder might suffer in the process – the results indicate that the premium paid by the winner in a leaked deal is on average 13% less than in non-leaked deals. This runs counter to the belief by some sellers that a premature deal announcement will attract more bidders and thus drive up pricing.

Further illustrating the impact a press leak might have, the study also suggests that whilst the average time taken for a non-leaked deal to complete stands at 62 days, this figure increases by 43 days (or 70%) – bringing the average time to complete to 105 days – if the deal is prematurely announced.

Andrew Pearson, Managing Director EMEA at IntraLinks, commented:

“Many people in many organizations are involved in the M&A process, and since they all now have access to electronic communication channels, it is more important than ever to control and monitor the flow of information about a deal before it has been announced. The run-up to announcement is a particularly sensitive point in the M&A process and our research shows the potential damage caused by press leaks at this stage. Centralizing information flow through a system with a complete audit trail engenders better behaviour and trust that confidentiality will be respected."

Professor Scott Moeller, M&A lecturer and former managing director and senior investment banker at Deutsche Bank and Morgan Stanley, commented on the research that he supervised:

“Market leaks and insider trading receive considerable press attention but this is the first study to identify the impact of a pre-announcement leak to the press. Companies would be wise to heed the factors identified in this research so that they are fully aware of the historical impact of such leaks on deal activity.”

Andrew Pearson, Managing Director EMEA at IntraLinks, concluded:

“As the financial industry looks at better ways to manage and mitigate risk we anticipate virtual datarooms (VDRs) to really showcase their value. Confidentiality and speed are vital to the success of the financial markets – the very ethos lying behind VDRs and their use in the M&A process.”

* ’Friendliness’ is classified as a deal completed with Board endorsement

Dimitra Koutsantoni | alfa
Further information:
http://www.cass.city.ac.uk/media/stories/story_2_18491_118140.html
http://www.cass.city.ac.uk

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Neutron star merger directly observed for the first time

University of Maryland researchers contribute to historic detection of gravitational waves and light created by event

On August 17, 2017, at 12:41:04 UTC, scientists made the first direct observation of a merger between two neutron stars--the dense, collapsed cores that remain...

Im Focus: Breaking: the first light from two neutron stars merging

Seven new papers describe the first-ever detection of light from a gravitational wave source. The event, caused by two neutron stars colliding and merging together, was dubbed GW170817 because it sent ripples through space-time that reached Earth on 2017 August 17. Around the world, hundreds of excited astronomers mobilized quickly and were able to observe the event using numerous telescopes, providing a wealth of new data.

Previous detections of gravitational waves have all involved the merger of two black holes, a feat that won the 2017 Nobel Prize in Physics earlier this month....

Im Focus: Smart sensors for efficient processes

Material defects in end products can quickly result in failures in many areas of industry, and have a massive impact on the safe use of their products. This is why, in the field of quality assurance, intelligent, nondestructive sensor systems play a key role. They allow testing components and parts in a rapid and cost-efficient manner without destroying the actual product or changing its surface. Experts from the Fraunhofer IZFP in Saarbrücken will be presenting two exhibits at the Blechexpo in Stuttgart from 7–10 November 2017 that allow fast, reliable, and automated characterization of materials and detection of defects (Hall 5, Booth 5306).

When quality testing uses time-consuming destructive test methods, it can result in enormous costs due to damaging or destroying the products. And given that...

Im Focus: Cold molecules on collision course

Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.

How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...

Im Focus: Shrinking the proton again!

Scientists from the Max Planck Institute of Quantum Optics, using high precision laser spectroscopy of atomic hydrogen, confirm the surprisingly small value of the proton radius determined from muonic hydrogen.

It was one of the breakthroughs of the year 2010: Laser spectroscopy of muonic hydrogen resulted in a value for the proton charge radius that was significantly...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ASEAN Member States discuss the future role of renewable energy

17.10.2017 | Event News

World Health Summit 2017: International experts set the course for the future of Global Health

10.10.2017 | Event News

Climate Engineering Conference 2017 Opens in Berlin

10.10.2017 | Event News

 
Latest News

Ocean atmosphere rife with microbes

17.10.2017 | Life Sciences

Neutrons observe vitamin B6-dependent enzyme activity useful for drug development

17.10.2017 | Life Sciences

NASA finds newly formed tropical storm lan over open waters

17.10.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>