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Value Creation in Distressed M&As

Freundl, Raphael LU and Wähning, Patrick LU (2018) BUSN79 20181
Department of Business Administration
Abstract
This thesis concludes that financially distressed targets’ shareholders
gain significantly higher premiums. Acquirers’ shareholders suffer from
value destruction in the short-run when acquiring distressed targets,
whereas in the long-run value is created. However, both findings are
insignificantly different from non-distressed M&As. Key long-term
value drivers in distressed M&As are relative size affecting acquirer
returns in a curvilinear relation and the potential for replacing an
inefficient management. Surprisingly, acquirers’ pre-merger financial
viability does not robustly impact long-term value.
Popular Abstract
This thesis concludes that financially distressed targets’ shareholders
gain significantly higher premiums. Acquirers’ shareholders suffer from
value destruction in the short-run when acquiring distressed targets,
whereas in the long-run value is created. However, both findings are
insignificantly different from non-distressed M&As. Key long-term
value drivers in distressed M&As are relative size affecting acquirer
returns in a curvilinear relation and the potential for replacing an
inefficient management. Surprisingly, acquirers’ pre-merger financial
viability does not robustly impact long-term value.
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author
Freundl, Raphael LU and Wähning, Patrick LU
supervisor
organization
course
BUSN79 20181
year
type
H1 - Master's Degree (One Year)
subject
keywords
M&A, Financial Distress, Value Creation, Corporate Restructuring, Event Study, Acquisition Premium, Cumulative Abnormal Returns (CAR), Buy-and-Hold Abnormal Returns (BHAR)
language
English
id
8954571
date added to LUP
2018-07-06 08:38:56
date last changed
2018-07-06 08:38:56
@misc{8954571,
  abstract     = {This thesis concludes that financially distressed targets’ shareholders
gain significantly higher premiums. Acquirers’ shareholders suffer from
value destruction in the short-run when acquiring distressed targets,
whereas in the long-run value is created. However, both findings are
insignificantly different from non-distressed M&As. Key long-term
value drivers in distressed M&As are relative size affecting acquirer
returns in a curvilinear relation and the potential for replacing an
inefficient management. Surprisingly, acquirers’ pre-merger financial
viability does not robustly impact long-term value.},
  author       = {Freundl, Raphael and Wähning, Patrick},
  keyword      = {M&A,Financial Distress,Value Creation,Corporate Restructuring,Event Study,Acquisition Premium,Cumulative Abnormal Returns (CAR),Buy-and-Hold Abnormal Returns (BHAR)},
  language     = {eng},
  note         = {Student Paper},
  title        = {Value Creation in Distressed M&As},
  year         = {2018},
}