Alternatively, when low levels of ownership are purchased, target firms
continue to possess the autonomy necessary to adopt resource deployment patterns unaffected by the norms of other organizational units within the acquiring firm.
One 2003 article, summarizing the findings of prior studies, concludes that the shareholders of target firms
do benefit, but that gains to the acquirer's shareholders are usually close to zero--or even worse.
Acquiring and target firms
can exhibit pre-merger differences in either levels of compensation or in compensation mix, including salary and performance-based components such as bonuses, restricted stock, long-term incentive plans, and stock options.
Side by side with your list of target firms
should be a list of how best to influence them," Flesher said.
Therefore, in an efficient market, any repricing of excess pension assets, or wealth transfers associated with these assets due to the announcement of the acquisition proposal, will be reflected in the abnormal returns of the acquiring and target firms
In particular, we test whether institutional ownership in target firms
has any bearing on the type of antitakeover defense launched by target firms
as well as the success of takeover bids.
In general, the basic findings from the event studies of the announcement effects of mergers provide generally consistent evidence that there are gains to stockholders of target firms
Jarrell |1985~ found that shareholders of target firms
receiving multiple takeover bids obtained risk-adjusted returns 17 percent higher than shareholders of target firms
receiving only one takeover bid.
Asquith |1983~ argues that target firms
achieve significant positive abnormal returns during the merger process while bidding firms do not.
Furthermore, Fowler and Schmidt (1989) found lower post-acquisition performance for acquirers of hostile targets than for acquirers of friendly target firms
So, how do you price M&A transactions considering the behavior of the acquirer and target firms
, while considering the changes in the business cycle?
The median score for target firms
is seven, while the median score for acquiring firms is eight.