Acquisition premium paid by different investors - public strategic investor or private equity fund, who is paying more in an acquisitionand for which factors is he paying more?

Abstract

This research investigates who is paying more for acquisitions, a public strategic investor or a private equity buyout fund. Furthermore, it investigates for which factors the investor pays more. The data consist of 935 transactions in Europe. Using data from Europe is a main distinction between the often used data from America. It is found that a target shareholder selling its shares, gets on average a 64.49% higher price from a public strategic investor compared to a private equity fund. Furthermore, it is discovered that variables like the level of cash are a driver for a higher acquisition premium.