Team Bidding by Private Equity Sponsors: Are the Antitrust Allegations Plausible?

Abstract

The dozen largest private equity firms are accused of bid-rigging in the mergers and acquisitions (M&A) market due to the practice of team bidding in groups known as clubs or consortia. The antitrust allegations are implausible, however, because the segments of the M&A market dominated by private equity firms are among the most competitive of all, sale processes are run by disinterested directors who’s permission generally is required before prospective buyers can team up, and the differential average offer premium paid by teams of private equity sponsors is zero.