 Financial or strategic buyers: Who is at the gate?Carlo Chiarella and Diego Ostinelli International Review of Economics & Finance, 2020, vol. 67, issue C, 393-407 Abstract: Target companies are differently affected when acquired by a financial sponsor as opposed to a strategic buyer. In this paper we analyze M&A activity by financial sponsors and strategic buyers in the euro area between 2002 and 2018, linking their relative contributions to deal flow to the conditions in capital markets. Does the composition of the M&A deal flow change over time? How do different types of acquirers respond to varying conditions in debt and equity markets? We find that M&A activity by financial sponsors and strategic buyers are not synchronous and that capital market conditions affect the composition of the M&A deal flow through multiple channels. In particular, the relative contribution of financial sponsors to overall deal flow grows when the risk-free rate increases, while the opposite occurs when the difference between the credit risk premium of high-yield and investment-grade issuers widens and when stock market valuations rise. Keywords: Mergers and acquisitions; Leveraged buyouts; Cost of debt; Equity valuations (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:67:y:2020:i:c:p:393-407 DOI: 10.1016/j.iref.2020.02.005 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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