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
Blockchain Set to Transform the Financial Services Market
28.09.2016 | HHL Leipzig Graduate School of Management
Paper or plastic?
08.07.2016 | University of Toronto
Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.
"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...
In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.
A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...
By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.
"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...
COMPAMED has become the leading international marketplace for suppliers of medical manufacturing. The trade fair, which takes place every November and is co-located to MEDICA in Dusseldorf, has been steadily growing over the past years and shows that medical technology remains a rapidly growing market.
In 2016, the joint pavilion by the IVAM Microtechnology Network, the Product Market “High-tech for Medical Devices”, will be located in Hall 8a again and will...
'Ferroelectric' materials can switch between different states of electrical polarization in response to an external electric field. This flexibility means they show promise for many applications, for example in electronic devices and computer memory. Current ferroelectric materials are highly valued for their thermal and chemical stability and rapid electro-mechanical responses, but creating a material that is scalable down to the tiny sizes needed for technologies like silicon-based semiconductors (Si-based CMOS) has proven challenging.
Now, Hiroshi Funakubo and co-workers at the Tokyo Institute of Technology, in collaboration with researchers across Japan, have conducted experiments to...
14.10.2016 | Event News
14.10.2016 | Event News
12.10.2016 | Event News
21.10.2016 | Health and Medicine
21.10.2016 | Information Technology
21.10.2016 | Materials Sciences