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| Author: | Officer, M. S. |
| Title: | The price of corporate liquidity: Acquisition discounts for unlisted targets |
| Journal: | Journal of Financial Economics
2007 : MAR, VOL. 83:3, p. 571-598 |
| Index terms: | private companies corporate liquidity stock returns subsidiary companies |
| Freeterms: | acquisition discounts non-listed |
| Language: | eng |
| Abstract: | The paper documents discounts for acquisitions of unlisted targets that average approximately 15%-30% relative multiples paid to acquire comparable publicly traded companies. The parent firms are found to be significantly liquidity-constrained prior to the sale of unlisted subsidiaries. In addition, the extents of liquidity constraints are significantly associated with acquisition discounts. When debt capital is relatively more expensive to obtain, the acquisition discounts are greater, study concludes. |
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