We provide the first evidence on the performance of private operating firms as acquirers. Private bidders experience greater post-acquisition operating per- formance improvements compared to public bidders.
This effect is not due to differences in target types, merger accounting, financing constraints, private equity ownership or subsequent listing of some private bidders, and is robust to instrumentation. Further analysis of governance arrangements at least partially attributes the private bidder effect to lower agency costs in private firms. Not only do private firms pay lower prices for target firm assets, they also operate them more efficiently by containing overhead costs and capital expenditures.
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The E.U. Takeover Directive was passed twenty years ago with the main aim of fostering a single European takeover market. However, subsequent economic,...