The Role of Lockups in Stock Mergers
2021
We document the frequent use of stock lockup agreements in mergers and acquisitions (MA ex-ante, lockups adoption likelihood increases with acquirers’ valuation. Lockups also come with higher deal completion likelihood; shorter merger negotiations; higher long-term operating performance. We conclude the market interprets lockups as a signal of strong fundamentals, particularly when acquirers’ valuations are high.
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