Post-Acquisition Performance of Private Acquirers
64 Pages Posted: 6 Sep 2016 Last revised: 5 Dec 2019
Date Written: November 25, 2019
We provide the first evidence on the performance of private operating firms as acquirers. Private bidders experience greater post-acquisition operating performance improvements compared to public bidders. This effect is not due to differences in target types, merger accounting, financing constraints, private equity ownership or subsequent listing of some private bidders, and is robust to instrumentation. Further analysis of governance arrangements at least partially attributes the private bidder effect to lower agency costs in private firms. Not only do private firms pay lower prices for target firm assets, they also operate them more efficiently by containing overhead costs and capital expenditures.
Keywords: private firms, mergers and acquisitions, operating performance improvements, agency conflicts
JEL Classification: G34
Suggested Citation: Suggested Citation