|dc.description.abstract||This master thesis investigates differences in target characteristics and takeover
premiums in acquisitions performed by private equity firms and strategic buyers.
We use a dataset of 67 takeovers of listed European companies where the target
was acquired by a private equity firm, which we match with 67 comparable
transactions performed by strategic buyers. The acquisitions in our sample were
announced between 2008 and 2017. In contrast to previous research, we find that
there seems to be few statistically significant differences in the characteristics of
the targets acquired by the two types of buyers when we control for differences in
timing, deal size and target industry. Additionally, we do not find any statistically
significant difference in the takeover premiums the two types of buyers pay. This
is contrary to most previous research, but in line with the work of Fidrmuc. et. al.
(2012). We argue that these findings could be the result of higher competition for
targets following an increasing amount of capital under private equity management.
Previous research has shown that increased inflow of capital to private equity funds
result in increased target valuations, which we argue is likely to have narrowed the
gap in takeover premiums between the two buyer types as the private equity
industry has matured.
Lastly, we look at how target characteristics are related to takeover premiums. Our
results show that the target’s margins and profitability are negatively related to
takeover premiums, while R&D expenditures are positively related to takeover
premiums. Therefore, both acquirers seem to be willing to pay a higher takeover
premium for targets with a potential for higher cash flows in the future, than for
targets that already are generating positive cash flow today.||nb_NO