Darryl Laws

 Example Report. Summary Statistics for Merger Premiums.  

The sample used in my web-based survey consists of fifteen (15) U.S. based private equity fund managers, M&A investment bankers, M&A attorneys and acquisitive CEOs of U.S. based companies  that have acquired one or more private of public target companies within a two-year (2) period and with a deal value of one million dollars or more. The acquisition or merger premium for a publicly traded company is defined as the difference between the offer price and the market price of the target company after the announcement of the transaction. Whereas the acquisition premium for a privately held company is the difference between the estimated real value of a company and the actual price paid to obtain it. A substantial body of evidence indicates that M&A premiums average 20% to 35% above a target’s pre-acquisition price. Between 1990 to 2010 the average premium paid was 36% (Kengelbach and Roos (2011). “Control premiums” are often dictated by the target company’s shareholders for transferring controlling interest.

Low premium portfolio comprises the lowest 30% premium paying firms. Medium premium portfolio comprises the middle 40% firms. High premium portfolio comprises the highest 30% firms. The deal value ($ million) is the total value of consideration paid by the acquirer, excluding fees and expenses. Book-to-market is acquirers’ book value of equity divided by the market capitalization. Target EPS (earnings per share) 2-year growth rate is the average two-year earnings per share growth rate prior to the merger. Cash payment refers to deals paid for using 100% cash, while stock payment refers to deals paid for using 100% stock. The table that I have constructed below will report both mean and median values. For High-Low the test statistics used I will use both the conventional parametric t-test and the Wilcoxon test (non-parametric).  

Darryl Laws