Asst. Prof. Andrey Malenko: Types of Bidders are Key Factor in Corporate Takeovers

MIT Sloan Asst. Prof. Andrey Malenko

The market for corporate control is staggeringly large. In 2007 alone, the value of M&A transactions in the world was $4.8 trillion. Even in the wake of the economic crisis, it’s still a very active market with many complex features.

One of these features is the type of bidders involved in a corporate takeover auction. They fall into two categories: Strategic bidders such as competitors who are looking for long-term operational synergies, and financial bidders such as private equity firms and divisions of investment banks. Financial bidders are looking for financial synergies as well as for undervalued companies with the potential to improve operations.

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