Acquisitions Of Private Vs. Public Firms: Private Information, Target Selection, And Acquirer Returns
INTRODUCTION
The volume of acquisitions involving privately held targets far surpasses that of publicly traded firms. Based on the SDC database, we find that between 60 and 75 percent of the firms acquired in the United States between 2000 and 2004 were privately held. Other studies find similar results across longer time periods and countries (Moeller, Schlingemann, and Stulz, 2004; Faccio, McConnell, and Stolin, 2006). Yet, despite some notable exceptions (Graebner and Eisenhardt, 2004; Graebner, 2004; Reuer and Ragozzino, 2007), acquisitions of private firms remain largely unexplored. Most existing studies of mergers and acquisitions (M&A) performance have focused on acquisitions of public targets by public acquirers (Chatterjee, 1986; Singh and Montgomery, 1987; Lubatkin, 1987; Seth, 1990).