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Breakingviews: M&A leaks

Thursday, April 18, 2013 - 03:16

April 18 - Leaked deals are less likely to close, but premiums are often much higher. Richard Beales and Jeffrey Goldfarb discuss incentives for bankers to blab.

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-- details any minute deals usually get done in great secrecy but if that was always the case we wouldn't have that much to write about. Turns out when they do leak they get bigger premiums so maybe -- that the difference at least definitely sent a we don't really know out there resisting study goes on via the London school of business. -- -- we should mention also released at a big event divide merger market which treats an -- leaks and sponsored by -- links. The Bruins selling technology to keep things quiet but nevertheless commissioning findings that. The amount of leaks seem to be going down right the risks ultimately why is -- going off the idea that at least the people report. Our our scribe securities. Increased enforcement. On the UK takeover panel has has crack down on you Israel and a league kid in the US authority have implemented some new rules about is accelerating -- companies have to disclose if they've been approached -- -- the news leaks out. I was also bad now much more folks on market abuse here in the United States and things like that may be. And any other factors probably fewer deals and an -- over the last couple years we've seen less and I. So there's probably going to be -- leaking because there's. Fewer reasons to do it sort of seemed obvious risks up. Anger turns out. -- we don't know causality but it did seem to be some I mean there are reasons lewis' deal with a big premium and bleak as people are proud of it though because. It's particularly interesting and so a lot of ego involved for shore when it comes to come right out as and they they could feel kinds of reasons but it's kind of obstacles you -- questioned whether you're good deals are getting -- -- -- right right that's that's the real question what's happening here. You know we kind of played around with for some of the numbers. The risk being that if you -- a deal it's less likely to close. Or the numbers show that -- deals tend to close -- although -- -- while the same time the premium you're gonna get as much higher so we kind of played around with that idea. About whether or not the there's -- a financial incentive for a banker -- and potentially lead to deal. It does seem to be -- you know how -- few million dollars more in fees maybe if right if you had a calculator your ideal actually is is the thing that makes a move more valuable that maybe some incentive to do it that -- a question whether it's the -- now direct an area there's all sorts of other questions that -- raised by this. And it's not clear him of the longer trip term the longer term trends suggest there isn't a big premium right from -- deals. But it certainly a topic there's always gonna fascinate bankers who use it as a tactic on the sell side. Buyers. You just crumpled buyers may do it to kind of either it's corrupt deal. Or a buyer who's in the negotiation they wanted to accelerate we might force solitaire there's all kinds of reasons wipe themselves out trying to push the price -- stuff yeah I and so. You know it certainly fascinating study you know for journalists and for bankers in terms of as unemployment threatens the credit market. -- okay will leave that there will be keeping an eye out for the next deal leak and if we have it. We'll tell you about it on breaking news tomorrow but it note will be back with something else.

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Breakingviews: M&A leaks

Thursday, April 18, 2013 - 03:16

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