Acquisition Premia of Distressed Targets - Analysis of the Motives behind the Acquisition of Distressed Targets
(2012) BUSN89 20121Department of Business Administration
- Abstract
- After confirming the fact that distressed targets achieve on average higher acquisition premia than non-distressed ones, the purpose of the thesis is the investigation of an acquirer’s possible rational motives of paying a premium for a distressed target. Particularly, faster synergy realization, lower transaction value, removal of managerial inefficiency, tax benefits and reduction of financial distress are examined. The findings of the study conclude that paying a high premium for a distressed target can indeed be justified, but only as long as the acquirer has the right management team with suitable turnaround skills on board - since the reduction of managerial inefficiency is found to be statistically and economically the most... (More)
- After confirming the fact that distressed targets achieve on average higher acquisition premia than non-distressed ones, the purpose of the thesis is the investigation of an acquirer’s possible rational motives of paying a premium for a distressed target. Particularly, faster synergy realization, lower transaction value, removal of managerial inefficiency, tax benefits and reduction of financial distress are examined. The findings of the study conclude that paying a high premium for a distressed target can indeed be justified, but only as long as the acquirer has the right management team with suitable turnaround skills on board - since the reduction of managerial inefficiency is found to be statistically and economically the most important factor in explaining the premium paid for financially distressed acquisition targets. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/2836019
- author
- Behnke, Jasmin LU and Foukaki, Amalia LU
- supervisor
- organization
- course
- BUSN89 20121
- year
- 2012
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Acquisition Premium, Distressed Targets, Synergy Realization, Transaction Value, Managerial Inefficiency, Tax Benefits, Financial Distress
- language
- English
- id
- 2836019
- date added to LUP
- 2012-06-25 14:36:52
- date last changed
- 2012-06-25 14:36:52
@misc{2836019, abstract = {{After confirming the fact that distressed targets achieve on average higher acquisition premia than non-distressed ones, the purpose of the thesis is the investigation of an acquirer’s possible rational motives of paying a premium for a distressed target. Particularly, faster synergy realization, lower transaction value, removal of managerial inefficiency, tax benefits and reduction of financial distress are examined. The findings of the study conclude that paying a high premium for a distressed target can indeed be justified, but only as long as the acquirer has the right management team with suitable turnaround skills on board - since the reduction of managerial inefficiency is found to be statistically and economically the most important factor in explaining the premium paid for financially distressed acquisition targets.}}, author = {{Behnke, Jasmin and Foukaki, Amalia}}, language = {{eng}}, note = {{Student Paper}}, title = {{Acquisition Premia of Distressed Targets - Analysis of the Motives behind the Acquisition of Distressed Targets}}, year = {{2012}}, }