Number of ‘Leaked’ M&A Deals Falling
The number of merger and acquisition deals leaked around the world has fallen in the past two years, according to new a study conducted by the UK’s Cass Business School’s M&A Research Center, with Intralinks Holdings and Remark.
The research study examined more than 4,000 transactions from 2004 through 2012 and interviewed 30 M&A practitioners in Europe and the U.S. It found that leaked deals take longer to execute and are significantly less likely to close. The research interviews also showed that most deal leaks are deliberate, with leaking by sellers responsible for driving higher bid premiums and leaking by bidders or third parties done to terminate bid discussions.
“In the vast majority of cases, neither the buyer nor the target want the deal to leak, with both parties usually benefitting from keeping a takeover secret until they are ready to announce the transaction,” said Philip Whitchelo, vice president of product marketing at Intralinks. “It’s clear from our research that the risks associated with leaks are rising. As a result there’s evidence that sellers and their advisers are taking the issue of pre-announcement deal confidentiality much more seriously.”
The research examined significant pre-announcement trading in the stock of a target company in the days leading up to the bid announcement, which is highly indicative of information leakage about the deal. Key findings from the research include:
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