Seller Debt in Acquisitions of Private Firms: A Security Design Approach

• 成果类型: Article
• 署名作者: Jansen, Mark; Phalippou, Ludovic; Noe, Thomas
• 署名单位: Utah System of Higher Education; University of Utah; University of Oxford
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhad063
• 发表日期: 2024
• 页码: 507
• 关键词: financial structure; insurance markets; INFORMATION; overconfidence; equilibrium; exchange; beliefs; mergers; equity; MODEL

摘要

We propose a security design model in which a potential acquirer approaches a firm with a value-add plan. The target has a single owner, who possesses private information: he alone knows whether his firm is compatible with the plan. The owner agrees that the acquirer will add value but believes that the value-add will not be as much as what the acquirer expects. Although the acquirer can choose any monotone limited liability security to offer along with cash, we show that, under general conditions, any security that is employed always takes the form of nonrecourse debt provided by the seller.