Determinants of M&A Acquisition Premiums on the European Market in the Period of 2009 to 2022

Marc Brixius, Jens Kai Perret (), Jörg Schröder and Kamilė Taujanskaitė
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Marc Brixius: Department of Strategy, Finance & Innovation, International School of Management, Campus Cologne, Im MediaPark 5c, 50667 Cologne, Germany
Jens Kai Perret: Department of Economics and Quantitative Methods, International School of Management, Campus Cologne, Im MediaPark 5c, 50667 Cologne, Germany
Jörg Schröder: Department of Strategy, Finance & Innovation, International School of Management, Campus Dortmund, Otto-Hahn. Str. 19, 44227 Dortmund, Germany
Kamilė Taujanskaitė: Department of Financial Engineering, Vilnius Gediminas Technical University, Saulėtekio al. 11, 10223 Vilnius, Lithuania

IJFS, 2025, vol. 13, issue 4, 1-21

Abstract: This study analyzes the development and determinants of control premiums in mergers and acquisitions in the European market from 2009 to 2022 (i.e., stock volatility, liquidity via money supply, sectoral growth, transaction volume, market capitalization, free cash flows, presence of a toehold, public listing, cross-border transactions, payment types, and sectoral relatedness), whereby control premiums represent the premium that buyers pay above the current market value of a company to gain control. The empirical analysis implements linear as well as quantile regression analyses. Results reveal that the average and median premiums fluctuated notably between 2009 and 2022, with the lowest premiums paid in 2009 and the highest in 2022. Factors such as the volatility of the stock market, capital liquidity, and deal activity within certain sectors have a consistently significant influence on the level of premiums if a longer period of analysis is selected. Cross-border status, payment structure, stock market listing of the acquiring company, and the build-up of a toehold influence the premiums paid in shorter- and longer-term analyses. In contrast, neither the market capitalization nor the free cash flow of the target company has a significant influence on the premiums paid.

Keywords: Europe; transaction; takeover; premium; mergers; acquisitions (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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