Bidders’ gains and family control of private target firms

Halit Gonenc, Niels Hermes () and Erik van Sinderen

International Business Review, 2013, vol. 22, issue 5, 856-867

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.

Keywords: Acquisitions; Family firms; Bidder returns; Private targets; Europe (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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DOI: 10.1016/j.ibusrev.2013.01.005

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