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"Abstract: Ownership dispersion is a first-order determinant of M&A practices. Firms with dispersed ownership are more salient, and tend to be larger, but dispersion varies significantly among even large US businesses, and affects M&A deal size, duration, techniques, contract terms, and outcomes. These effects arise directly from the economics of dispersion, but also from interactions between economics and law. Dispersion creates transaction costs and heterogeneous beliefs and preferences that have straightforward effects on M&A deal size, techniques, and some contract terms. But dispersion also has less intuitive, indirect, and important effects as mediated through laws that among other things compensate for agency costs and collective action problems. Each key body of law for M&A -- contract law, corporate law, securities law, and antitrust law -- is shaped in practice by ownership of target firms. These effects are tested in 20 hypotheses on how ownership dispersion affects M&A, with comprehensive M&A data from the 1990s and 2000s, and a new detailed hand-coded matched sample of 120 recent public and private target M&A contracts. The data show the importance of ownership to M&A deal structure, choice of consideration, bid duration, completion rates, risk-allocation, and dispute resolution. Appreciation of how pervasive and powerful the effects of ownership are on M&A should improve contracting and has implications for investment bankers, boards, courts, and researchers in choosing comparable transactions for valuation, benchmarking, doctrinal analogies, drafting models, teaching M&A in business and lawschools, and econometric modeling of M&A"--John M. Olin Center for Law, Economics, and Business web site.
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The powerful and pervasive effects of ownership on M&A
2010, Harvard Law School
Electronic resource
in English
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Book Details
Edition Notes
Title from PDF file as viewed on 6/24/2010.
Includes bibliographical references.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.
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- Created December 16, 2010
- 3 revisions
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September 25, 2020 | Edited by MARC Bot | import existing book |
August 4, 2012 | Edited by VacuumBot | Updated format '[electronic resource] /' to 'Electronic resource' |
December 16, 2010 | Created by ImportBot | Imported from Library of Congress MARC record |