• Acquisitions: a curse or blessing for direct competitors? The impact of target ownership structure  

      Mataigne, Virginie; Luypaert, Mathieu; Manigart, Sophie (Journal of Corporate Finance, 2021)
      This study examines the impact of horizontal acquisition announcements on the value of direct competitors of the combined entity. We argue that the ownership structure of the target drives competitor wealth effects. First, the stronger disciplining force of the market for corporate control for public firms compared to private firms will lead to higher competitive pressure post-acquisition when a public firm is acquired, leading to more negative valuation effects of direct competitors. Second, acquisitions of subsidiary targets, compared to stand-alone targets, are expected to lead to stronger asset utilization improvements in the target, leading to more negative competitor returns. A unique hand-collected sample of 1,038 direct competitors of 228 horizontal acquisitions in Europe empirically supports these hypotheses. Alternative explanations, such as information asymmetry or empire-building, are rejected.
    • How do investment banks value Initial Public Offerings (IPOs)?

      Deloof, Marc; De Maeseneire, Wouter; Inghelbrecht, Koen (Journal of Business Finance and Accounting, 2009)
    • The impact of control on the discount for lack of marketability

      Van den Cruijce, Johan (Tax Notes International, 2022)
      Valuations of private companies can be required for tax purposes, merger and acquisition transactions, divorce settlements, partnership restructurings, etc. Very often, these valuations take place in litigious circumstances. The process for valuing private companies is deceptively complex. This is notably because there is no consensus on the size and determinants of two important valuation discounts that may need to be applied: the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM). We have constructed a unique dataset based on court decisions that decide on a DLOM and identify its determinants. Ultimately, this dataset has allowed us to examine whether the level of control attached to the valuation subject has a significant effect on the DLOM. This paper finds that control, while normally attributed solely to the DLOC, also impacts marketability. This hitherto overlooked determinant has a statistically significant impact of 8% on the DLOM. Contrary to conventional wisdom, control applies not once but twice to a private company’s value: as the primary driver of the DLOC and again as a key determinant of the DLOM.
    • The impact of control on the discount for lack of marketability

      Van den Cruijce, Johan (Tax Notes State, 2022)
      Valuations of private companies can be required for tax purposes, merger and acquisition transactions, divorce settlements, partnership restructurings, etc. Very often, these valuations take place in litigious circumstances. The process for valuing private companies is deceptively complex. This is notably because there is no consensus on the size and determinants of two important valuation discounts that may need to be applied: the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM). We have constructed a unique dataset based on court decisions that decide on a DLOM and identify its determinants. Ultimately, this dataset has allowed us to examine whether the level of control attached to the valuation subject has a significant effect on the DLOM. This paper finds that control, while normally attributed solely to the DLOC, also impacts marketability. This hitherto overlooked determinant has a statistically significant impact of 8% on the DLOM. Contrary to conventional wisdom, control applies not once but twice to a private company’s value: as the primary driver of the DLOC and again as a key determinant of the DLOM.
    • The impact of control on the discount for lack of marketability

      Van den Cruijce, Johan (Tax Notes Federal, 2022)
      Valuations of private companies can be required for tax purposes, merger and acquisition transactions, divorce settlements, partnership restructurings, etc. Very often, these valuations take place in litigious circumstances. The process for valuing private companies is deceptively complex. This is notably because there is no consensus on the size and determinants of two important valuation discounts that may need to be applied: the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM). We have constructed a unique dataset based on court decisions that decide on a DLOM and identify its determinants. Ultimately, this dataset has allowed us to examine whether the level of control attached to the valuation subject has a significant effect on the DLOM. This paper finds that control, while normally attributed solely to the DLOC, also impacts marketability. This hitherto overlooked determinant has a statistically significant impact of 8% on the DLOM. Contrary to conventional wisdom, control applies not once but twice to a private company’s value: as the primary driver of the DLOC and again as a key determinant of the DLOM.