M&A Outcomes and Willingness to Sell

Eric De Bodt, Jean-Gabriel Cousin and Irina De Bruyne Demidova

Finance, 2014, vol. 35, issue 1, 7-49

Abstract: Should target shareholders divulgate their willingness to sell (WTS)? In this article, we tackle this issue by investigating the net WTS wealth effect. We first model the trade-off between the probability of a sale and the price paid in case of a sale, and derive testable predictions. We then provide an empirical test using a proxy of the target?s WTS based on deal initiation and the chosen selling procedure, which are hand-collected in Securities and Exchange Commission filings. The results reveal a negative relationship between the target?s displayed WTS and its expected profits, mitigated by competition among acquirers.

Date: 2014
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