Dependence of Target Valuation in M&A Deals on the Type of the Acquirer

Abstract

Author: Ilya Markovich National Research University The Higher School of Economics Partyin ipartin@hse.ru

Target company valuation in mergers and acquisition (M&A) deal can depend on the type of the acquirer. There is a prevalent opinion that strategic investors pay more for the target company shares than financial investors, which usually pay less. In this article we use regression analysis in order to examine this hypothesis. We take EV/EBITDA deal multiple as a dependent variable in the model. Our analysis shows that hypothesis cannot be rejected. Thus owners of the target companies should consider strategic investors as preferred option in M&A deal, since they can pay more.