M&A Outcomes and Willingness to Sell
47 Pages Posted: 17 Nov 2011 Last revised: 14 Oct 2012
Date Written: October 12, 2012
Is it in target shareholders’ best interest to divulgate their willingness to sell (WTS)? In this article, we tackle this issue by investigating the net WTS wealth effect. We first model the trade-off between the probability of a sale and the price paid in case of a sale, and derive testable predictions. We then provide an empirical test using a proxy of the target WTS based on deal initiation and the chosen selling procedure, which are hand-collected in the Securities and Exchange Commission filings. Our results reveal, among others, a negative relation between the displayed WTS and target’s expected profits, mitigated by competition among acquirers.
Keywords: Willingness to sell, Mergers and Acquisitions, Bid Premium, Deal Completion
JEL Classification: G34
Suggested Citation: Suggested Citation