Acquiring Targets Picked by Private Equity : The Effect of Competitor Identity on Corporate Merger Gains
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- Master Thesis 
This paper examines the e↵ect of private equity competition on corporate takeovers. I find that corporate acquirers who compete with financial sponsors outperform those who compete exclusively with other corporate acquirers, and that acquirers earn higher abnormal returns when following the bid of a financial sponsor rather than a bid made by another corporate buyer. This e↵ect persists when controlling for fixed e↵ects and observable characteristics pertaining to the deal, target and/or bidder, suggesting that financial sponsors identify value-enhancing acquisition targets and winning corporate buyers reap the benefit. However, further analyses indicate that these corporate bidders might also be inherently better acquirers due to some unobserved ability. While my results align with prior research on the topic, there are multiple robustness concerns and a high risk of bias associated with the small sample sizes used in the sub-analyses. Thus, the findings presented in this paper are weak in evidence, even when statistically robust.