Bidders' gains and family control of private target firms

Halit Gonenc*, Niels Hermes, Erik van Sinderen

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

11 Citations (Scopus)

Abstract

This paper examines the announcement returns of bidders acquiring private firms owned by families versus the returns of bidders acquiring non-family controlled private firms. The sample consists of 391 acquisitions of private targets in seven continental European countries for the period 1997-2008. We find evidence that bidder's cumulative announcement returns (CARs) are lower when they acquire family controlled targets compared to non-family controlled targets. We show that this result holds regardless of whether the deal is paid with shares or cash and whether or not the bidding firm is also privately owned. Moreover, the result is independent of the size of the acquisition relative to the size of the acquiring firm. Our findings are consistent with the notion that the bidder has to pay a higher price in order to convince the family owners to sell in return for giving up private benefits. (C) 2013 Elsevier Ltd. All rights reserved.

Original languageEnglish
Pages (from-to)856-867
Number of pages12
JournalInternational Business Review
Volume22
Issue number5
DOIs
Publication statusPublished - Oct-2013

Keywords

  • Acquisitions
  • Family firms
  • Bidder returns
  • Private targets
  • Europe
  • WESTERN-EUROPEAN CORPORATIONS
  • OWNERSHIP
  • RETURNS
  • ACQUISITIONS
  • PERFORMANCE
  • DECISIONS
  • PAYMENT
  • EVENT

Cite this