The Revaluation of Industry Assets Following Acquisitions of Public or Private Targets

57 Pages Posted: 1 May 2017 Last revised: 12 Jul 2019

See all articles by François Derrien

François Derrien

HEC Paris - Finance Department

Laurent Frésard

University of Lugano; Swiss Finance Institute

Victoria Slabik

HEC Paris (Groupe HEC), Finance Department

Philip Valta

University of Bern

Date Written: July 11, 2019


This paper documents positive revaluations of industry peers following horizontal acquisitions of public targets, but negative revaluations when targets are privately owned. Because informed managers opportunistically purchase undervalued public firms, but favor private firms when similar public firms are overvalued, the ownership of acquisition targets conveys information about industry-wide misvaluation, triggering predictable revaluations of peers. The “revaluation spread” observed across public and private targets predicts future industry returns, is larger when valuation appears further away from fundamentals, and varies with proxies for overall market misvaluation. In contrast, the revaluation spread is largely unrelated to peers’ fundamentals and the possible real implications of horizontal transactions. Our findings suggest that an active market for real assets fosters the ability of stock prices to reflect fundamentals accurately.

Keywords: Merger & acquisitions; Information; Revaluation; Stock returns; Peers; Misvaluation

JEL Classification: G34

Suggested Citation

Derrien, François and Frésard, Laurent and Slabik, Victoria and Valta, Philip, The Revaluation of Industry Assets Following Acquisitions of Public or Private Targets (July 11, 2019). Available at SSRN: or

François Derrien (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
33 1 39 67 72 98 (Phone)


Laurent Frésard

University of Lugano ( email )

Lugano, 900

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

Victoria Slabik

HEC Paris (Groupe HEC), Finance Department ( email )


Philip Valta

University of Bern ( email )

Engehaldenstrasse 4
Bern, 3012

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