Dependence of the multiplier in the transaction on the magnitude of the buyer multiplier

Table 23. Regression results (merged data - public and private targets, normalized deal multiple)

	(1)	(2)	(3)	(4)	(5)
	P/BV	P/BV norm	P/V	ROE/CoE	GO/P
ln_Acq_pbv	0.232***
	(0.040)
Type_target	0.121	0.261***	0.256***	0.222**	0.225**
	(0.085)	(0.070)	(0.070)	(0.097)	(0.097)
Type_Acq_pbv	0.154**
	(0.074)
ln_Acq_pbv_norm		0.246***
		(0.042)
Type_Acq_pbv_norm		0.104
		(0.081)
ln_Acq_PV			0.206***
			(0.046)
Type_Acq_PV			0.034
			(0.098)
Acq_roecoe				0.017
				(0.011)
Type_Acq_roecoe				-0.018
				(0.030)
Target_roecoe				0.041***
				(0.011)
Type_Target_roecoe				-0.025
				(0.021)
Acq_GOMC					-0.065**
					(0.027)
Type_Acq_GOMC					0.037
… Here and thereafter we provide shortened versions of tables with regression results omitting control variables. Full versions of the tables can be found in the Appendix in Table 41 - Table 42
					(0.041)
Obs.	1050	1050	1068	974	1030
R-squared	0.344	0.342	0.299	0.322	0.294
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Source: author's calculations

Table 24. Regression results (dependent variable - normalized deal multiple, overall sample of deals)

	Public targets	Private targets
	P/BV	P/BV norm	P/V	P/BV	P/BV norm	P/V
ln_Acq_pbv	0.239***			0.405***
	(0.042)			(0.076)
ln_Acq_pbv_norm		0.246***			0.394***
		(0.043)			(0.076)
ln_Acq_PV			0.215***			0.185**
			(0.044)			(0.094)
… Here and thereafter we provide shortened versions of tables with regression results omitting control variables. Full versions of the tables can be found in the Appendix in Table 36-Table 38
Obs.	860	860	870	190	190	198
R-squared	0.336	0.335	0.330	0.392	0.391	0.296

Source: author's calculations

Control variables

From Table 33 - Table 35 in the Appendix to Chapter 3 we see cash payment dummy to have positive and statistically significant sign consistent with prior studies (Travlos, 1987; Moeller, 2005; Savor and Lu, 2009; Bruslerie, 2013); unsolicited offer dummy is positive and statistically significant meaning that acquirers making a bid for a target who was not actively searching for a buyer might have to pay more compared to when target shareholders are actively searching for a buyer; acquirer size has a positive and statistically significant sign consistent with prior studies (Moeller et al., 2004); target size has a negative and statistically significant sign consistent with prior studies (Officer, 2003; Moeller, 2004; Alexandridis, 2013); acquirer leverage has a negative and statistically significant sign consistent with prior studies (Dong et al., 2006; Simonyan, 2014); target leverage has a positive and statistically significant sign consistent with research of Billett and Ryngaert (1997) and Raad (2012); target cash (% total assets) has a positive and statistically significant sign, this result is not consistent with prior studies (Billett Ryngaert, 1997; Schwert, 2000) and seems counterintuitive but since average ROE/CoE is less than 1 so average target is destroying economic value and is probably at growth life cycle stage, cash might serve as a liquid asset with risk-free return valuable to acquirer; target stock price's relation to its trailing 52-week high has a negative and statistically significant sign consistent with prior studies (Baker et al., 2012); S&P P/Earnings normalized multiple has a negative and statistically significant sign consistent with prior studies (Bouwman et al., 2009; Alexandridis, 2013; Simonyan, 2014) demonstrating that deal premiums tend to be lower during periods of high market-wide valuations and increased M&A activity so that potential del premium gets built in the share prices of target firms.



Conclusion

In this paper we examine the relationship between acquirer valuation and its components and deal premium/deal multiple for two samples of data - deals between public acquirers and public targets and deals between public acquirers and private targets conducted in the US in 2010-2019. Prior research focuses on deals with public targets due to higher data availability and on deal, target and acquirer characteristics, however, influence of acquirer valuation on deal premium/deal multiple is relatively less studied and results are inconclusive (Dong et al., 2006; Alexandridis, 2013; Simonyan, 2014). We aimed to fill this gap by exploring the influence of acquirer P/BV and P/Value multiples on deal premium/deal multiple for both public and private targets and we decompose acquirer equity value into value-generating potential measured by ROE/CoE, growth opportunities and mispricing to investigate which components of acquirer valuation impact deal premium/deal multiple.

Firstly, we explore how acquirer valuation influences deal premium in deals with public targets. We find positive and significant relationship between P/BV and P/Value for the subsample of deals with stock as means of payment which implies that the more overvalued acquirer is, the more incentive he has to pay a higher price for a target which is consistent with behavioral theory of M&A activity which says that financial market is inefficient and firms are not always priced correctly, so managers might take advantage of market inefficiencies and finance their acquisitions inexpensively with overvalued stock. Our findings are consistent with misvaluation theory and prior study of Dong et al., 2006. We also find positive and significant influence of difference in acquirer and target valuation on deal premium. Therefore, we find evidence that acquirer is ready to pay higher premium when his multiple is higher than multiple of a target because he has bigger “buffer” in which he can operate without destroying shareholder value, the effect is more pronounced for stock deals than for overall sample of deals. In case of stock deals acquirer paying with stock that is more highly valued than stock of a target basically means that he attracts financing at lower cost than his rate of return which he receives investing in a target.

Among other factors that positively influence deal premium in deals with public targets are acquirer value-generating ability (ROE/CoE) and target growth opportunities. The positive coefficient by acquirer ROE/CoE is consistent with Q theory of investment (Jovanovic, B. and Rousseau, P., 2002) which states that acquisitions redeploy assets and takeovers tend to eliminate target wasteful behavior and make a target get access to bidder better investment opportunities; in the first sample acquirers create positive economic value as ROE/CoE is higher than 1 while targets destroy economic value which can be connected with both different life cycle stages and different management and efficiency. Therefore, acquirers with higher ROE/CoE are ultimately better run, can more effectively integrate a target into their business and achieve the expected synergies which leads to higher deal premium.

The positive coefficient by target growth opportunities can be explained by the fact that targets with higher growth opportunities are more desirable by the acquirers, receive on overage more competitive bids and have higher bargaining power which leads to higher deal premiums. Our findings are consistent with prior studies (Davis and Madura, 2015; Davis and Madura, 2017).

Secondly, we explore the influence of acquirer valuation on normalized by industry average deal multiple in deals with private targets. We find that acquirer P/BV influence on deal multiple is positive and significant also for overall sample and both stock and cash deals and mispricing proxy P/Value is significant for overall sample and stock subsample and not significant for cash subsample of deals. Therefore, we find support for the fact that more highly valued acquirers are ready to pay higher deal multiples as they can pay more without diluting shareholder value.

Thirdly, we compare results across two samples by building regression of normalized deal multiple on a set of variables for merged data of public and private targets together. We notice that mean deal multiple for private targets (3.3x) is significantly higher than for public targets (1.65x). Our findings are consistent with prior study of Ang and Kohers (2001) which state that private targets have higher bargaining power due to their concentrated ownership and absence of less informed outside investors who might pressure company into selling during unfavorable times. We also find that acquirer valuation influences deal multiple of private targets more than deal multiple of public targets. This might be explained by the fact that 75% of deals with private targets are carried out by acquirers in the same industry and since a private target does not have market valuation, acquirer valuation and multiples might serve as a reference point during negotiations and private targets with their higher bargaining power can push deal multiple towards acquirer multiple (taking into account premium for control). Public targets, on the other hand, have their own market multiples which serve as stronger reference point in deal negotiations, therefore, influence of acquirer multiples on deal multiple is lower.

Obtained results have an array of limitations which leaves room for further research. Firstly, linear regression approach implies linear relationship between acquirer valuation and deal premium/deal multiple which might not always be the case. Secondly, the decomposition of market value into components is based on defining fundamental value as the predicted value from ordinary least squares (OLS) regression where market capitalization is regressed on the set on company fundamentals such as book value of equity, net income, leverage, cost of equity and year and industry dummy variables. This approach is limited as it is backward looking as it does not consider prospects of the company measured by future cash flows which can be estimated by using historical analyst predictions. Moreover, the decomposition of value could depend on other factors that affect growth options and mispricing such as forecasted EPS growth, free cash flows to equity, etc. The data availability problem still needs to be solved. Finally, the research can be extended, firstly, to other mature markets like European market that differs in terms of ownership concentration, mix of institutional investors, debt and equity financing which can all lead to different conclusions and secondly, extended to the deals completed on emerging markets.



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Appendix to Chapter 1

Table 25.Deal characteristics influence on deal premium

	Synergies	Competitive bids	Hostility	Cash payment	Tender offer	Public acquirer	IB involvement
Asquith, 1983	+
Gupta and Gerchak, 2002	+
Madura and Ngo, 2008	+
Walkling and Edmister, 1985		+
Stulz, 1990		+
Flanagan and O'Shaughnessy, 2003		+
Betton, 2009		+	+	+
Aktas, 2010		+
Schwert, 2000		+	+	+
Comment, Schwert, 1995		+	+	+
Travlos, 1987				+
Moeller, 2005				+
Savor and Lu, 2009				+
Bruslerie, 2013				+
Schwert, 1996					+
Officer, 2003					+
Moeller et al., 2004					+
Offenberg, 2015					+
Bargeron et al., 2007						+
Lai, 2019						+
Porrini, 2006							+



Table 26. Target and acquirer characteristics influence on deal premium

	Toehold	Industry relatedness	Target size	Acquirer size	Target leverage	Acquirer leverage	Target cash	Acquirer cash	Target R&D
Walkling and Edmister, 1985	-				-
Betton&Eckbo, 2000	-
Bris, 2002	-
Bessler, 2015	-
Officer, 2003		+	-
D.J. Flanagan and K.C. O'Shaughnessy, 2003		+
Ang, Cheng, and Nagel, 2008		-
Moeller, 2004			-	+
Alexandridis, 2013			-
Billett and Ryngaert,1997					+
Raad, 2012					+
Dong et al., 2006						-
Simonyan, 2014	-					-
Billett Ryngaert, 1997							-
Schwert, 2000			-				-
Harford, 1999								+
Vladimirov, 2015								+
Davis and Madura, 2017									+
Wu, Chung, 2019									+



Table 27. Target and acquirer valuation influence on deal premium

	Target P/BV	Target P/V	Acquirer P/BV	Acquirer P/V
Comment, Schwert, 1995	-
Dong et al., 2006	-	-	not signif.	not signif.
Alexandridis, 2013	-		+
Simonyan, 2014	-		-
Jory, 2016	not signif.		not signif.
Davis and Madura, 2017	not signif.		not signif.

Table 28. Macroeconomic and industry factors influence on deal premium

	Stock market valuation	Investment climate	Industry growth	Industry R&D	Industry concentration	Industry ROE
Bouwman et al., 2009	-
Alexandridis, 2013	-
Simonyan, 2014	-
Madura, 2012	+		+	+	+	+
Harford, 2005	+
Rossi and Volpin, 2004		+
Maung, 2019		+
Rhoades, 1987			+
Simonyan, 2014					-

Table 29. Hypotheses overview

№	Hypothesis	Influencing factor	Methodology	Result
1	Buyers with higher Price/Book buy targets with lower Price/Book	P/BV	Difference in means t-test	Not confirmed
2	In deals where acquirer P/BV is higher than target P/BV, deal premium is higher than in deals where relationship is opposite	P/BV	Difference in means t-test	Not confirmed
3	Buyer with higher Price-to-Value buy targets with lower Price-to-Value	P/Value	Difference in means t-test	Not confirmed
4	Buyers with less growth opportunities buy targets with more growth opportunities	Growth opportunities	Difference in means t-test	Confirmed
5	Buyers with higher value-creating potential (ROE/CoE) buy targets with lower value-creating potential (ROE/CoE)	ROE/CoE	Difference in means t-test	Confirmed for public targets-public acquirers Rejected for private targets-public acquirers
6	Private targets receive on overage higher deal multiple than public targets	Normalized deal multiple	Difference in means t-test	Confirmed
7	a) Higher buyer P/BV leads to higher deal premium b) Higher buyer P/BV leads to higher deal multiple	Acquirer P/BV	Multivatiate OLS regression	Confirmed for stock subsample Confirmed
8	a) Higher buyer growth opportunities lead to lower deal premium b) Higher buyer growth opportunities lead to lower deal multiple	Acquirer growth opportunities	Multivatiate OLS regression	Not confirmed Not confirmed
9	a): Higher buyer P/V (mispricing) leads to higher deal premium b): Higher buyer P/V (mispricing) leads to higher deal multiple	Acquirer P/V	Multivatiate OLS regression	Confirmed for stock subsample Confirmed for stock subsample
10	a): Higher buyer ROE/CoE leads to lower deal premium b): Higher buyer ROE/CoE leads to lower deal multiple	Acquirer ROE/CoE	Multivatiate OLS regression	Confirmed Not confirmed
11	Influence of acquirer P/BV, P/Value, growth opportunities and ROE/CoE on deal multiple is the same for deals with public and private targets	Acquirer P/BV, P/Value, growth opportunities and ROE/CoE	Dummy variable Type_Target and interaction variable, F-test for joint significance	Rejected



Appendix to Chapter 2

Table 30. Summary statistics of deal premium for a sample of takeovers in 2010-2019 (public targets)

Table 31. Normalized P/BV deal multiple public (0) vs private (1) targets



Table 32. Normalized median P/BV deal multiple across sectors and years public (0) vs private (1) targets

Appendix to Chapter 3

Table 33. Regression results (dependent variable- deal premium, public targets, all deals)

	(1)	(2)	(3)	(4)	(5)
	P/BV	P/BV norm	P/V	ROE/CoE	GO/P
ln_Acq_pbv	0.059
	(0.047)
ln_Target_pbv	-0.088**
	(0.034)
ln_Acq_pbv_norm		0.043
		(0.048)
ln_Target_pbv_norm		-0.115***
		(0.033)
ln_Acq_PV			0.033
			(0.053)
ln_Target_PV			-0.122***
			(0.044)
Acq_roecoe				0.030***
				(0.010)
Target_roecoe				-0.014
				(0.010)
Acq_GOMC					-0.010
					(0.012)
Target_GOMC					0.038***
					(0.014)
Stake_acq	0.762	0.759	0.755	1.104**	1.046**
	(0.487)	(0.489)	(0.474)	(0.507)	(0.530)
1.Cash_payment	0.114**	0.115**	0.081	0.090	0.092
	(0.057)	(0.056)	(0.056)	(0.058)	(0.058)
1.Unsolicited	0.181***	0.185***	0.181***	0.178***	0.169***
	(0.064)	(0.064)	(0.061)	(0.062)	(0.062)
ln_Acq_MC	0.132***	0.134***	0.141***	0.122***	0.133***
	(0.017)	(0.017)	(0.021)	(0.018)	(0.018)
ln_Target_MC	-0.176***	-0.171***	-0.174***	-0.180***	-0.173***
	(0.018)	(0.018)	(0.019)	(0.020)	(0.019)
Acq_lev	-0.064**	-0.065**	-0.053**	-0.057*	-0.061**
	(0.029)	(0.028)	(0.026)	(0.029)	(0.029)
Target_lev	0.058**	0.057**	0.035	0.052**	0.043
	(0.024)	(0.024)	(0.026)	(0.026)	(0.027)
Acq_cash	-0.004	-0.017	-0.052	0.133	0.097
	(0.219)	(0.215)	(0.210)	(0.219)	(0.225)
Target_cash	0.329***	0.350***	0.209	0.102	0.161
	(0.126)	(0.125)	(0.133)	(0.139)	(0.127)
Target_52_high	-0.445***	-0.445***	-0.463***	-0.401**	-0.279
	(0.169)	(0.163)	(0.163)	(0.198)	(0.207)
Same_ind	0.048	0.069	0.037	0.032	0.045
	(0.060)	(0.060)	(0.057)	(0.064)	(0.062)
SP500_pe_norm	-0.585***	-0.456***	-0.503**	-0.624***	-0.584***
	(0.193)	(0.175)	(0.195)	(0.203)	(0.204)
ln_Acq_ind_pbv	0.048*		0.047*		0.041
	(0.027)		(0.024)		(0.027)
Acq_ind_roe	-0.630		-0.586		-0.484
	(0.558)		(0.518)		(0.577)
Acq_ind_coe	0.381		1.320		0.976
	(1.609)		(1.524)		(1.613)
Target_ind_roe		0.313		-0.288
		(0.360)		(0.594)
Target_ind_coe		0.887		1.926
		(1.573)		(1.631)
ln_Target_ind_pbv				0.044
				(0.027)
_cons	-1.331**	-1.606***	-1.516***	-1.729***	-1.850***
	(0.566)	(0.562)	(0.563)	(0.576)	(0.628)
Obs.	862	862	908	817	817
R-squared	0.214	0.216	0.221	0.211	0.207
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 34. Regression results (dependent variable- deal premium, public targets, stock deals)

	(1)	(2)	(3)	(4)	(5)
	P/BV	P/BV norm	P/V	ROE/CoE	GO/P
ln_Acq_pbv	0.201***
	(0.066)
ln_Target_pbv	-0.212***
	(0.050)
ln_Acq_pbv_norm		0.171***
		(0.064)
ln_Target_pbv_norm		-0.268***
		(0.053)
ln_Acq_PV			0.152**
			(0.072)
ln_Target_PV			-0.211***
			(0.064)
Acq_roecoe				0.045***
				(0.013)
Target_roecoe				-0.010
				(0.018)
Acq_GOMC					-0.017
					(0.016)
Target_GOMC					0.043**
					(0.021)
Stake_acq	0.761	0.728	0.507	0.960	0.797
	(0.838)	(0.861)	(0.808)	(0.812)	(0.840)
1.Unsolicited	0.295***	0.292***	0.287***	0.260***	0.245***
	(0.094)	(0.093)	(0.088)	(0.088)	(0.088)
ln_Acq_MC	0.182***	0.185***	0.179***	0.181***	0.189***
	(0.026)	(0.026)	(0.026)	(0.029)	(0.028)
ln_Target_MC	-0.232***	-0.227***	-0.235***	-0.254***	-0.238***
	(0.028)	(0.026)	(0.027)	(0.031)	(0.029)
Acq_lev	-0.060	-0.062	-0.062	-0.072	-0.063
	(0.066)	(0.065)	(0.061)	(0.068)	(0.067)
Target_lev	0.013	0.008	0.036	0.026	0.011
	(0.031)	(0.030)	(0.031)	(0.031)	(0.033)
Acq_cash	-0.360	-0.330	-0.297	0.066	-0.048
	(0.402)	(0.393)	(0.380)	(0.393)	(0.398)
Target_cash	0.485**	0.549**	0.274	0.013	0.074
	(0.232)	(0.232)	(0.205)	(0.260)	(0.240)
Target_52_high	-0.273	-0.238	-0.193	-0.297	-0.091
	(0.241)	(0.238)	(0.243)	(0.282)	(0.298)
Same_ind	-0.066	-0.025	-0.060	-0.118	-0.103
	(0.108)	(0.106)	(0.100)	(0.113)	(0.110)
SP500_pe_norm	-1.018***	-0.936***	-1.125***	-1.083***	-0.988***
	(0.270)	(0.265)	(0.273)	(0.285)	(0.288)
ln_ Acq_ind_pbv	0.051		0.070**		0.060
	(0.039)		(0.035)		(0.038)
Acq_ind_roe	-0.569		-0.753		-0.667
	(0.775)		(0.714)		(0.790)
Acq_ind_coe	0.719		0.789		1.366
	(2.376)		(2.247)		(2.414)
Target_ind_roe		0.123		-0.584
		(0.493)		(0.836)
Target_ind_coe		-0.229		1.001
		(2.390)		(2.414)
ln_Target_ind_pbv				0.052
				(0.040)
_cons	-1.103	-1.185	-0.746	-1.021	-1.312
	(0.978)	(1.000)	(0.935)	(0.936)	(0.974)
Obs.	494	494	516	477	477
R-squared	0.242	0.242	0.238	0.229	0.220
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 35. Regression results (dependent variable- deal premium, public targets, cash deals)

	(1)	(2)	(3)	(4)	(5)
	P/BV	P/BV norm	P/V	ROE/CoE	GO/P
ln_Acq_pbv	-0.096
	(0.063)
ln_Target_pbv	-0.035
	(0.046)
ln_Acq_pbv_norm		-0.076
		(0.063)
ln_Target_pbv_norm		-0.043
		(0.045)
ln_Acq_PV			-0.129**
			(0.066)
ln_Target_PV			-0.081
			(0.059)
Acq_roecoe				0.003
				(0.016)
Target_roecoe				-0.013
				(0.010)
Acq_GOMC					0.070
					(0.046)
Target_GOMC					0.032*
					(0.017)
Stake_acq	0.793	0.740	1.011*	1.084*	1.286*
	(0.583)	(0.562)	(0.553)	(0.626)	(0.670)
1.Unsolicited	0.071	0.081	0.079	0.105	0.100
	(0.085)	(0.084)	(0.084)	(0.091)	(0.091)
ln_Acq_MC	0.105***	0.101***	0.126***	0.091***	0.110***
	(0.024)	(0.024)	(0.032)	(0.026)	(0.026)
ln_Target_MC	-0.116***	-0.114***	-0.118***	-0.114***	-0.110***
	(0.028)	(0.027)	(0.029)	(0.029)	(0.030)
Acq_lev	-0.091***	-0.085***	-0.051***	-0.084***	-0.106***
	(0.025)	(0.024)	(0.016)	(0.026)	(0.026)
Target_lev	0.111***	0.117***	0.035	0.130***	0.145***
	(0.034)	(0.031)	(0.032)	(0.047)	(0.046)
Acq_cash	0.135	0.077	0.030	0.122	0.202
	(0.233)	(0.226)	(0.227)	(0.232)	(0.237)
Target_cash	0.348**	0.340**	0.123	0.209	0.249*
	(0.150)	(0.151)	(0.185)	(0.152)	(0.146)
Target_52_high	-0.789***	-0.758***	-0.882***	-0.687**	-0.711**
	(0.242)	(0.228)	(0.227)	(0.301)	(0.316)
Same_ind	0.094	0.108	0.085	0.087	0.094
	(0.071)	(0.071)	(0.069)	(0.075)	(0.074)
SP500_pe_norm	-0.008	-0.043	0.184	-0.152	-0.101
	(0.252)	(0.231)	(0.268)	(0.264)	(0.265)
ln_ Acq_ind_pbv	0.033		0.023		0.016
	(0.034)		(0.032)		(0.035)
Acq_ind_roe	-0.696		-0.590		-0.624
	(0.756)		(0.736)		(0.808)
Acq_ind_coe	-1.020		0.821		-2.153
	(2.110)		(2.135)		(2.161)
Target_ind_roe		0.154		0.129
		(0.476)		(0.806)
Target_ind_coe		0.804		0.827
		(1.961)		(2.119)
ln_Target_ind_pbv				0.023
				(0.034)
_cons	-1.379*	-1.630**	-2.060***	-1.867***	-2.040**
	(0.706)	(0.656)	(0.715)	(0.714)	(0.830)
Obs.	368	368	392	340	340
R-squared	0.215	0.214	0.225	0.196	0.202
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 36. Regression results (public sample, dependent variable-deal premium)

	All deals	Stock deals	Cash deals
	P/BV ratio	P/BV ratio	P/BV ratio
ln_pbv_ratio	0.076**	0.206***	-0.011
	(0.030)	(0.049)	(0.033)
Stake_acq	0.758	0.765	0.707
	(0.485)	(0.576)	(0.511)
1.Cash_payment	0.115**
	(0.057)
1.Unsolicited	0.182***	0.295***	0.083
	(0.063)	(0.088)	(0.081)
ln_Acq_MC	0.129***	0.181***	0.089***
	(0.017)	(0.031)	(0.024)
ln_Target_MC	-0.177***	-0.233***	-0.116***
	(0.018)	(0.031)	(0.028)
Acq_lev	-0.062**	-0.059	-0.085***
	(0.029)	(0.044)	(0.029)
Target_lev	0.060**	0.014	0.122***
	(0.024)	(0.032)	(0.039)
Acq_cash	-0.014	-0.365	0.107
	(0.220)	(0.312)	(0.236)
Target_cash	0.315**	0.476*	0.313**
	(0.125)	(0.243)	(0.157)
Target_52_high	-0.448***	-0.277	-0.763***
	(0.169)	(0.227)	(0.224)
Same_ind	0.048	-0.066	0.092
	(0.060)	(0.123)	(0.075)
SP500_pe_norm	-0.588***	-1.018***	-0.062
	(0.192)	(0.291)	(0.271)
Acq_ind_pbv_c~d	0.044*	0.050	0.017
	(0.027)	(0.035)	(0.035)
Acq_ind_roe	-0.601	-0.561	-0.569
	(0.556)	(0.803)	(0.811)
Acq_ind_coe	0.546	0.780	-0.409
	(1.534)	(2.550)	(2.385)
_cons	-1.322**	-1.104	-1.253*
	(0.566)	(0.779)	(0.663)
Obs.	862	494	368
R-squared	0.214	0.242	0.206
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 37. Regression results (dependent variable - normalized deal multiple, overall sample of deals)

	Public targets	Private targets
	P/BV	P/BV norm	P/V	P/BV	P/BV norm	P/V
ln_Acq_pbv	0.239***			0.405***
	(0.042)			(0.076)
ln_Acq_pbv_norm		0.246***			0.394***
		(0.043)			(0.076)
ln_Acq_PV			0.215***			0.185**
			(0.044)			(0.094)
ln_Stake_acq	0.460	0.455	0.412	0.681	0.671	0.925
	(0.306)	(0.306)	(0.313)	(0.700)	(0.902)	(0.930)
1.Cash_payment	-0.067	-0.078	-0.077	0.122	0.113	0.009
	(0.051)	(0.050)	(0.051)	(0.157)	(0.144)	(0.157)
1.Unsolicited	0.053	0.053	0.032	-0.103	-0.099	-0.135
	(0.050)	(0.050)	(0.050)	(0.205)	(0.202)	(0.202)
ln_Acq_assets	0.193***	0.194***	0.181***	0.296***	0.290***	0.152***
	(0.018)	(0.018)	(0.017)	(0.059)	(0.065)	(0.058)
ln_Target_ass~s	-0.181***	-0.181***	-0.176***	-0.328***	-0.326***	-0.274***
	(0.022)	(0.022)	(0.022)	(0.060)	(0.060)	(0.057)
Acq_lev_1	-0.919***	-0.966***	-0.849***	-0.895**	-0.849**	0.236
	(0.172)	(0.164)	(0.156)	(0.429)	(0.397)	(0.438)
Target_lev_1	1.336***	1.311***	1.285***	1.425***	1.434***	1.134***
	(0.191)	(0.183)	(0.195)	(0.321)	(0.356)	(0.365)
Acq_cash	-0.042	-0.078	0.058	0.228	0.271	0.963*
	(0.155)	(0.151)	(0.157)	(0.409)	(0.482)	(0.561)
Target_cash	0.709***	0.675***	0.738***	0.831**	0.835	0.609
	(0.161)	(0.155)	(0.159)	(0.406)	(0.525)	(0.554)
Same_ind	0.198***	0.204***	0.185***	-0.016	-0.033	-0.128
	(0.071)	(0.070)	(0.070)	(0.159)	(0.172)	(0.180)
SP500_pbv_norm	-0.022	-0.057	-0.014	-0.667	-0.589	-0.187
	(0.144)	(0.141)	(0.144)	(0.407)	(0.363)	(0.394)
ln_Acq_ind_pbv	-0.314***		-0.176**	-0.279		-0.263
	(0.085)		(0.079)	(0.213)		(0.191)
Acq_ind_roe	-0.535	-0.768	-0.870	0.423	0.840	-0.061
	(0.849)	(0.801)	(0.937)	(1.597)	(1.670)	(1.886)
Acq_ind_coe	-2.437	-2.444	-4.276	-7.545	-7.612	-0.641
	(4.468)	(4.443)	(4.462)	(10.034)	(11.881)	(11.897)
Target_ind_roe	-0.975	-1.070	-0.746	-3.056**	-2.922*	-2.683
	(0.852)	(0.823)	(0.895)	(1.418)	(1.673)	(1.819)
Target_ind_coe	-1.609	-1.388	-1.259	-0.330	-0.823	-9.017
	(4.508)	(4.485)	(4.464)	(10.047)	(11.385)	(12.224)
_cons	-2.140	-2.093	-1.625	-1.720	-1.651	-2.163
	(1.427)	(1.423)	(1.465)	(3.259)	(4.218)	(4.392)
Obs.	860	860	870	190	190	198
R-squared	0.336	0.335	0.330	0.392	0.391	0.296
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Source: author's calculations



Table 38. Regression results (dependent variable - normalized deal multiple, stock subsample of deals)

	Public targets	Private targets
	P/BV	P/BV norm	P/V	P/BV	P/BV norm	P/V
ln_Acq_pbv	0.344***			0.384***
	(0.062)			(0.088)
ln_Acq_pbv_norm		0.355***			0.375***
		(0.060)			(0.080)
ln_Acq_PV			0.308***			0.221*
			(0.059)			(0.121)
ln_Stake_acq	0.435	0.449	0.295	0.960	0.917	0.648
	(0.478)	(0.478)	(0.488)	(1.155)	(1.431)	(1.584)
1.Unsolicited	0.012	0.014	-0.022	-0.153	-0.152	-0.305
	(0.051)	(0.051)	(0.051)	(0.262)	(0.266)	(0.258)
ln_Acq_assets	0.134***	0.135***	0.112***	0.274***	0.270***	0.122**
	(0.020)	(0.020)	(0.021)	(0.073)	(0.082)	(0.061)
ln_Target_ass~s	-0.114***	-0.114***	-0.106***	-0.322***	-0.322***	-0.264***
	(0.025)	(0.025)	(0.025)	(0.077)	(0.078)	(0.065)
Acq_lev_1	-0.906***	-0.983***	-0.725***	-1.101*	-1.037**	0.288
	(0.217)	(0.207)	(0.222)	(0.565)	(0.473)	(0.524)
Target_lev_1	0.938***	0.905***	0.841***	1.457***	1.466***	1.173***
	(0.220)	(0.211)	(0.234)	(0.412)	(0.442)	(0.447)
Acq_cash	-0.145	-0.216	0.053	0.151	0.185	1.080*
	(0.230)	(0.221)	(0.227)	(0.477)	(0.545)	(0.616)
Target_cash	0.796***	0.746***	0.805***	0.845*	0.859	0.657
	(0.241)	(0.228)	(0.243)	(0.460)	(0.576)	(0.623)
Same_ind	0.157	0.173	0.137	0.006	-0.002	-0.069
	(0.114)	(0.109)	(0.107)	(0.189)	(0.195)	(0.203)
SP500_pbv_norm	-0.240	-0.280*	-0.196	-0.870*	-0.802	-0.154
	(0.170)	(0.164)	(0.176)	(0.506)	(0.487)	(0.502)
ln_Acq_ind_pb~n	-0.435***		-0.263***	-0.278		-0.330
	(0.094)		(0.091)	(0.267)		(0.238)
Acq_ind_roe	0.627	0.323	0.476	-0.385	-0.000	-0.331
	(1.001)	(0.987)	(0.955)	(1.986)	(1.762)	(2.015)
Acq_ind_coe	-5.302	-5.433	-5.630	-7.023	-6.810	0.977
	(8.543)	(8.637)	(7.530)	(11.715)	(13.199)	(13.111)
Target_ind_roe	-1.727*	-1.777*	-1.654*	-2.985*	-2.795	-2.093
	(1.027)	(0.992)	(0.959)	(1.759)	(1.976)	(2.028)
Target_ind_coe	1.491	1.857	-0.558	-1.930	-2.163	-8.212
	(8.658)	(8.759)	(7.627)	(11.494)	(12.405)	(13.641)
_cons	-1.697	-1.733	-0.613	-2.389	-2.240	-0.912
	(2.221)	(2.219)	(2.276)	(5.337)	(6.795)	(7.487)
Obs.	493	493	499	144	144	152
R-squared	0.358	0.356	0.328	0.349	0.348	0.265
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Source: author's calculations

Table 39. Regression results (dependent variable - normalized deal multiple, cash subsample of deals)

	Public targets	Private targets
	P/BV	P/BV norm	P/V	P/BV	P/BV norm	P/V
ln_Acq_pbv	0.108*			0.791***
	(0.056)			(0.278)
ln_Acq_pbv_norm		0.107*			0.665**
		(0.058)			(0.293)
ln_Acq_PV			0.098			0.104
			(0.065)			(0.184)
ln_Stake_acq	0.351	0.352	0.351	0.086	0.233	1.122
	(0.378)	(0.378)	(0.383)	(0.922)	(1.170)	(1.262)
1.Unsolicited	0.082	0.082	0.072	-0.038	0.045	0.398
	(0.088)	(0.088)	(0.087)	(0.394)	(0.402)	(0.413)
ln_Acq_assets	0.229***	0.229***	0.222***	0.375***	0.363**	0.320**
	(0.027)	(0.027)	(0.026)	(0.129)	(0.139)	(0.132)
ln_Target_ass~s	-0.220***	-0.220***	-0.218***	-0.336***	-0.349***	-0.323**
	(0.034)	(0.034)	(0.034)	(0.111)	(0.109)	(0.126)
Acq_lev_1	-0.922***	-0.921***	-0.860***	-0.788	-0.622	0.406
	(0.265)	(0.259)	(0.216)	(0.921)	(0.976)	(0.843)
Target_lev_1	1.628***	1.629***	1.588***	1.618**	1.530**	1.243*
	(0.286)	(0.281)	(0.291)	(0.626)	(0.747)	(0.715)
Acq_cash	0.046	0.046	0.090	0.280	0.724	0.857
	(0.222)	(0.220)	(0.223)	(1.158)	(1.183)	(1.527)
Target_cash	0.684***	0.686***	0.703***	0.998	0.684	0.967
	(0.215)	(0.210)	(0.212)	(1.256)	(1.234)	(1.433)
Same_ind	0.206**	0.206**	0.203**	-0.184	-0.291	-0.754
	(0.092)	(0.092)	(0.092)	(0.469)	(0.590)	(0.759)
SP500_pbv_norm	0.198	0.202	0.182	-0.151	0.148	-0.722
	(0.241)	(0.242)	(0.238)	(0.932)	(0.673)	(0.577)
ln_Acq_ind_pb~n	-0.103		-0.037	-0.235		-0.042
	(0.144)		(0.132)	(0.461)		(0.504)
Acq_ind_roe	-1.639	-1.623	-1.836*	2.008	4.100	1.124
	(1.077)	(1.012)	(1.102)	(4.058)	(3.320)	(4.258)
Acq_ind_coe	-2.604	-2.608	-3.775	-44.318	-47.131	-45.773
	(5.260)	(5.258)	(5.370)	(32.840)	(41.365)	(46.702)
Target_ind_roe	-0.720	-0.713	-0.559	-4.645	-5.038	-4.600
	(1.193)	(1.143)	(1.207)	(3.617)	(3.354)	(4.398)
Target_ind_coe	-2.786	-2.796	-2.164	38.468	36.693	33.068
	(5.354)	(5.350)	(5.398)	(33.441)	(42.572)	(46.224)
_cons	-1.947	-1.953	-1.806	-0.377	-0.614	-3.282
	(1.751)	(1.742)	(1.787)	(4.186)	(5.543)	(6.040)
Obs.	367	367	371	46	46	46
R-squared	0.366	0.366	0.371	0.653	0.638	0.561
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Source: author's calculations

Table 40. Regression results (dependent variable- normalized deal multiple, overall sample of deals)

	Public targets	Private targets
	ROE/CoE	GO/P	ROE/CoE	GO/P
Acq_roecoe	0.018**		0.009
	(0.008)		(0.029)
Target_roecoe	0.044***		0.012
	(0.008)		(0.020)
Acq_GOMC		-0.059**		-0.042
		(0.025)		(0.030)
ln_Stake_acq	0.440*	0.465	1.277*	0.907
	(0.262)	(0.344)	(0.712)	(0.889)
1.Cash_payment	-0.129***	-0.092*	0.050	0.074
	(0.049)	(0.052)	(0.138)	(0.157)
1.Unsolicited	0.042	0.027	0.026	-0.135
	(0.049)	(0.051)	(0.166)	(0.209)
ln_Acq_assets	0.179***	0.191***	0.225***	0.149**
	(0.016)	(0.018)	(0.072)	(0.065)
ln_Target_assets	-0.146***	-0.181***	-0.243***	-0.289***
	(0.017)	(0.022)	(0.061)	(0.061)
Acq_lev_1	-0.671***	-0.765***	-0.195	-0.065
	(0.144)	(0.178)	(0.371)	(0.374)
Target_lev_1	0.913***	1.272***	1.274***	0.997***
	(0.140)	(0.199)	(0.357)	(0.372)
Acq_cash	0.181	0.121	0.405	0.686
	(0.161)	(0.165)	(0.433)	(0.544)
Target_cash	0.968***	0.730***	0.373	0.498
	(0.128)	(0.164)	(0.534)	(0.560)
Same_ind	0.130**	0.190***	-0.009	-0.197
	(0.055)	(0.071)	(0.162)	(0.193)
SP500_pbv_norm	-0.100	0.039	0.146	-0.226
	(0.125)	(0.147)	(0.350)	(0.389)
ln_Acq_ind_pbv	-0.138**	-0.147*	-0.272	-0.175
	(0.063)	(0.079)	(0.201)	(0.207)
Acq_ind_roe	-0.470	-0.992	-0.738	-1.458
	(0.547)	(0.891)	(1.631)	(1.900)
Acq_ind_coe	-3.934	-1.505	-9.490	-13.516
	(3.194)	(4.358)	(17.782)	(11.121)
Target_ind_roe	-2.019***	-0.854	-1.773	-1.590
	(0.525)	(0.861)	(1.516)	(1.713)
Target_ind_coe	-1.012	-2.560	0.528	6.477
	(3.207)	(4.390)	(17.296)	(11.198)
_cons	-1.836	-2.043	-5.069	-1.947
	(1.234)	(1.621)	(3.275)	(4.195)
Obs.	817	852	157	178
R-squared	0.336	0.312	0.328	0.295
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 41. Regression results (dependent variable- normalized deal multiple, stock sample of deals)

	Public targets	Private targets
	ROE/CoE	GO/P	ROE/CoE	GO/P
Acq_roecoe	0.023**		-0.020
	(0.010)		(0.030)
Target_roecoe	0.045***		0.009
	(0.011)		(0.028)
Acq_GOMC		-0.074*		-0.039
		(0.041)		(0.030)
ln_Stake_acq	0.289	0.232	1.324	0.739
	(0.308)	(0.537)	(1.019)	(1.545)
1.Unsolicited	-0.019	-0.021	0.006	-0.157
	(0.059)	(0.054)	(0.198)	(0.278)
ln_Acq_assets	0.139***	0.133***	0.207**	0.108
	(0.021)	(0.022)	(0.084)	(0.066)
ln_Target_ass~s	-0.118***	-0.116***	-0.252***	-0.264***
	(0.023)	(0.025)	(0.081)	(0.068)
Acq_lev_1	-0.576***	-0.585**	-0.285	-0.090
	(0.187)	(0.233)	(0.496)	(0.469)
Target_lev_1	0.601***	0.776***	1.411***	0.771*
	(0.181)	(0.240)	(0.462)	(0.444)
Acq_cash	0.408*	0.262	0.547	0.694
	(0.224)	(0.234)	(0.514)	(0.620)
Target_cash	0.739***	0.764***	0.392	0.481
	(0.190)	(0.257)	(0.604)	(0.629)
Same_ind	0.099	0.158	0.056	-0.141
	(0.086)	(0.104)	(0.180)	(0.214)
SP500_pbv_norm	-0.190	-0.178	0.140	-0.178
	(0.154)	(0.179)	(0.460)	(0.486)
ln_Acq_ind_pbv	-0.218***	-0.208**	-0.375	-0.189
	(0.075)	(0.091)	(0.238)	(0.257)
Acq_ind_roe	0.137	-0.014	-1.358	-1.825
	(0.884)	(0.828)	(1.747)	(2.113)
Acq_ind_coe	-1.669	-0.945	-11.349	-12.874
	(5.435)	(7.344)	(20.274)	(12.348)
Target_ind_roe	-1.789**	-1.561*	-0.974	-0.985
	(0.822)	(0.809)	(1.726)	(1.867)
Target_ind_coe	-2.369	-3.504	4.569	9.355
	(5.468)	(7.469)	(18.575)	(12.640)
_cons	-0.942	-0.543	-5.280	-1.372
	(1.467)	(2.532)	(4.733)	(7.308)
Obs.	477	487	116	134
R-squared	0.288	0.288	0.299	0.246
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1



Table 42. Regression results (dependent variable- normalized deal multiple, cash sample of deals)

	Public targets	Private targets
	ROE/CoE	GO/P	ROE/CoE	GO/P
Acq_roecoe	0.007		0.102
	(0.017)		(0.098)
Target_roecoe	0.045***		0.021
	(0.012)		(0.030)
Acq_GOMC		-0.012		-0.006
		(0.029)		(0.081)
ln_Stake_acq	0.360	0.497	1.368*	1.086
	(0.462)	(0.417)	(0.775)	(1.396)
1.Unsolicited	0.111	0.072	0.240	0.199
	(0.084)	(0.089)	(0.370)	(0.425)
ln_Acq_assets	0.206***	0.228***	0.197	0.338**
	(0.024)	(0.028)	(0.123)	(0.152)
ln_Target_ass~s	-0.157***	-0.218***	-0.147	-0.331**
	(0.028)	(0.035)	(0.113)	(0.133)
Acq_lev_1	-0.749***	-0.864***	0.563	0.395
	(0.234)	(0.273)	(0.810)	(0.911)
Target_lev_1	1.269***	1.601***	1.040*	1.514**
	(0.222)	(0.292)	(0.595)	(0.719)
Acq_cash	0.129	0.073	-1.003	0.972
	(0.248)	(0.230)	(0.924)	(1.387)
Target_cash	1.081***	0.706***	-0.234	1.096
	(0.190)	(0.217)	(1.355)	(1.287)
Same_ind	0.131*	0.204**	0.168	-0.882
	(0.078)	(0.094)	(0.341)	(0.990)
SP500_pbv_norm	-0.073	0.226	-0.398	-0.880
	(0.230)	(0.247)	(0.492)	(0.609)
ln_Acq_ind_pb~n	0.030	-0.032	-0.025	0.098
	(0.118)	(0.134)	(0.416)	(0.463)
Acq_ind_roe	-1.441*	-1.846*	5.088*	0.240
	(0.784)	(1.094)	(2.833)	(4.472)
Acq_ind_coe	-5.457	-2.441	9.963	-47.968
	(4.349)	(5.322)	(17.941)	(56.284)
Target_ind_roe	-2.535***	-0.609	-7.605***	-4.041
	(0.795)	(1.211)	(2.305)	(4.440)
Target_ind_coe	-1.640	-3.104	-17.988	37.478
	(4.401)	(5.375)	(18.787)	(56.000)
_cons	-1.657	-2.594	-6.066	-3.091
	(2.143)	(1.953)	(3.790)	(6.592)
Obs.	340	365	41	44
R-squared	0.410	0.360	0.661	0.582
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Table 43. Regression results (merged data - public and private targets, normalized deal multiple)

	(1)	(2)	(3)	(4)	(5)
	P/BV	P/BV norm	P/V	ROE/CoE	GO/P
ln_Acq_pbv	0.232***
	(0.040)
Type_target	0.121	0.261***	0.256***	0.222**	0.225**
	(0.085)	(0.070)	(0.070)	(0.097)	(0.097)
Type_Acq_pbv	0.154**
	(0.074)
ln_Acq_pbv_norm		0.246***
		(0.042)
Type_Acq_pbv_norm		0.104
		(0.081)
ln_Acq_PV			0.206***
			(0.046)
Type_Acq_PV			0.034
			(0.098)
Acq_roecoe				0.017
				(0.011)
Type_Acq_roecoe				-0.018
				(0.030)
Target_roecoe				0.041***
				(0.011)
Type_Target_roecoe				-0.025
				(0.021)
Acq_GOMC					-0.065**
					(0.027)
Type_Acq_GOMC					0.037
					(0.041)
ln_Stake_acq	0.583*	0.576*	0.654**	0.686**	0.616*
	(0.308)	(0.307)	(0.325)	(0.327)	(0.336)
1.Cash_payment	-0.093*	-0.102**	-0.119**	-0.098**	-0.126**
	(0.049)	(0.049)	(0.050)	(0.046)	(0.050)
1.Unsolicited	0.053	0.060	0.046	0.057	0.041
	(0.048)	(0.048)	(0.048)	(0.042)	(0.050)
ln_Acq_assets	0.201***	0.199***	0.169***	0.181***	0.174***
	(0.017)	(0.017)	(0.018)	(0.016)	(0.019)
ln_Target_assets	-0.203***	-0.205***	-0.201***	-0.161***	-0.205***
	(0.020)	(0.020)	(0.020)	(0.017)	(0.020)
Acq_lev_1	-0.936***	-0.945***	-0.538**	-0.590***	-0.632***
	(0.158)	(0.158)	(0.234)	(0.151)	(0.163)
Target_lev_1	1.408***	1.404***	1.279***	1.081***	1.273***
	(0.163)	(0.163)	(0.172)	(0.160)	(0.170)
Acq_cash	0.070	0.066	0.365	0.226	0.259
	(0.172)	(0.172)	(0.242)	(0.159)	(0.186)
Target_cash	0.724***	0.703***	0.681***	0.885***	0.703***
	(0.160)	(0.161)	(0.167)	(0.162)	(0.165)
Same_ind	0.155**	0.151**	0.088	0.117**	0.099
	(0.067)	(0.068)	(0.068)	(0.058)	(0.068)
SP500_pbv_norm	-0.132	-0.132	-0.032	-0.060	-0.008
	(0.133)	(0.134)	(0.147)	(0.124)	(0.139)
ln_Acq_ind_pbv	-0.328***	-0.070	-0.208***	-0.179***	-0.150**
	(0.076)	(0.070)	(0.076)	(0.066)	(0.072)
Acq_ind_roe	-0.122	-0.115	-0.498	-0.438	-1.109
	(0.796)	(0.803)	(0.923)	(0.721)	(0.792)
Acq_ind_coe	-3.884	-4.025	-3.297	-4.041	-3.870
	(4.338)	(4.351)	(4.624)	(3.678)	(4.230)
Target_ind_roe	-1.454*	-1.460*	-1.288	-1.945***	-0.954
	(0.766)	(0.771)	(0.848)	(0.606)	(0.756)
Target_ind_coe	-1.090	-0.983	-2.771	-1.173	-0.630
	(4.320)	(4.338)	(4.605)	(3.653)	(4.216)
_cons	-2.380*	-2.334	-2.357	-2.941*	-2.259
	(1.437)	(1.431)	(1.532)	(1.506)	(1.580)
Obs.	1050	1050	1068	974	1030
R-squared	0.344	0.342	0.299	0.322	0.294
Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1

Source: author's calculations

Table 44. F-tests for joint significance of dummy variable Type_target and interaction variables

Source: author's calculations

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