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- Title
The Impact of Go-Shop Provisions in Merger Agreements.
- Authors
Gogineni, Sridhar; Puthenpurackal, John
- Abstract
We examine whether go-shop provisions in merger agreements are used to benefit target shareholders or for agency/entrenchment reasons. We find that go-shop provisions are more likely in deals involving the negotiation selling method, financial buyers and all cash financing, and in targets with less valuation uncertainty. We confirm that go-shops have a positive association with the initial offer premium. Results suggest that deals with go-shop provisions are more likely to have a competing bid and an upward revision of the initial offer premium. Collectively, our results indicate that go-shops are effective contractual devices used to further target shareholder interests.
- Subjects
MERGER agreements; NEGOTIATION; MERGERS &; acquisitions; VALUATION; PREMIUMS (Retail trade); CONFIDENTIAL communications
- Publication
Financial Management (Wiley-Blackwell), 2017, Vol 46, Issue 1, p275
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/fima.12146