Control Premium in M&A Deals in BRIC Сountries

Student: Chvyrova Elena

Educational Programme: Strategic Corporate Finance (Master)

Final Grade: 9

Year of Graduation: 2016

Control premium is one of the most important adjustment applied in practice as a part of company valuation. Nowadays in general statistical data source Mergerstat is used for control premium valuation. However, these data based on the US market, so there are poorly applicable for the developing countries due to the market specifics. In this paper, event study has been used for determining premium for control in BRIC countries. The study based on mergers and acquisitions in 2000-2015 during which control was acquired. The study identifies the determinants of control premium: the size of the acquired shares and the presence of an initial package, target company size and the level of debt, deal type (domestic/cross-border, the same/different industries), the time of the transaction. The study also investigates the intellectual capital of the target company as a factor that has an effect on the size of the control premium.

Full text (added May 15, 2016)

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