Journal of Financial and Quantitative Analysis Vol. 60 No. 7 2025
How Are Firms Sold? The Role of Common Ownership
Abstract
We find that common ownership among acquirers enhances rather than hinders competition in the firm sale process. One common owner raises the likelihood that target firms are sold through auction (vs. negotiation with one buyer) by 21.5%. The effect is causal according to identifications based on mergers between financial institutions. Exploring economic channels, we observe selling firms respond to common ownership among acquirers by avoiding cross-owned acquirers, bargaining hard, and inviting more buyers when cross-owned acquirers initiate the deal but not by terminating the deal. Consistent with enhanced competition, common ownership among acquirers is positively associated with deal quality.
- DOI
- 10.1017/s0022109024000899
- Volume
- 60
- Issue
- 7
- Pages
- 3380-3411
- Language
- en
- Sources
- openalex crossref