The Evolution of the Market for Corporate Control

The Evolution of the Market for Corporate Control

Mike Burkart, Samuel Lee, Paul Voss

Series number :

Serial Number: 
956/2024

Date posted :

February 09 2024

Last revised :

February 12 2024
SSRN Share

Keywords

  • tender offers • 
  • takeover activism • 
  • free-rider problem • 
  • asymmetric information • 
  • Market for Corporate Control

In a canonical takeover model we let an informed large shareholder choose between making a bid or initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency.

As more investors enter the market for corporate control, takeover activism increasingly substitutes for direct takeovers and becomes the prevailing mode of effectuating control changes. Our theory thus proposes that investor activism has not superseded disciplinary acquisitions but instead brought about a new modus operandi: takeover activism, characterized by a symbiotic relationship between private equity and activist hedge funds.

Authors

Real name:
Fellow, Research Member
London School of Economics and Political Science
Dr
Real name:
Research Member
Leavey School of Business, Santa Clara University
Real name:
Paul Voss