A Study of Financial Premiums and Post Buyout Operating Performance between Financial Acquirers and Operating Acquirers in European Buyouts (1997-2014)

Daniel Chang & Felipe Galvez

Student thesis: Master thesis


In this thesis, we investigate if there is a difference in premium paid in buyouts by financial and operating buyers and if this potential difference can be explained by differences in post buyout operating performance. In a large sample of 1,332 buyouts from European stock exchanges between 1997 and 2014 we find that financial buyers pay, on average, almost nine percentage points less than operating buyers, eight weeks before the announcement date. The difference in premium is lower, however not as significant, in a sub-sample of 177 Scandinavian buyouts. Comparing pre- and post-buyout accounting data for a smaller sub-sample of 45 Scandinavian buyouts, we find no evidence of differences in operating performance between targets of financial and operating buyers. Hence, we are unable to explain the difference in premium with differences in post-buyout operating performance. In contrast, to economic intuition, the results suggests that there is a negative relation between the premium paid and the operating performance of the target post buyout.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2014
Number of pages57