Listing Effects and the Private Company Discount in Bank Acquisitions

We examine acquirer gains in bids for listed and unlisted targets in a large sample of bank acquisitions. Consistent with findings for the non-financial sector, we report that acquiring firm abnormal returns are significantly larger when the target is unlisted compared to bids for listed targets. Using pre-bid financial data for acquirer and targets in regressions, we estimate the magnitude of the acquisition discount for unlisted firms. We find that the multiple of deal value to target equity is 13.75% lower for unlisted targets, on average, and it is influenced by the method of payment and whether the bid is across state lines.