Events

Professor Alexander Gorbenko
Professor of Economics and Finance
Department of Economics and School of Management
University College London

We study how non-price deal terms shape outcomes in merger contests. We assemble a novel dataset of 820 U.S. mergers completed between 2015 and 2022 that records every formal offer, including price, payment method, financing contingencies, regulatory approval conditions, due diligence requirements, and exclusivity provisions. Three facts emerge. First, non-price terms are pervasive in private bidding. Second, their use varies systematically across bidder types, especially between strategic and financial acquirers. Third, price alone does not determine the winner: in 22% of contests with multiple formal bids, the highest price per share loses. We estimate an economic model to recover target valuations for these contractual provisions. The estimates imply that non-price deal terms have economically large effects and play a central role in determining which bidder ultimately acquires the target.