Control Premium
The amount above a target's pre-announcement trading price that an acquirer pays to gain 100% control of the company in an M&A transaction. The empirical control premium on US public targets has averaged 25-40% over the 30-day pre-announcement trading price, though dispersion is wide: contested deals can show 60%+ premiums, while friendly take-privates with no other bidders can show 15-20%. The premium compensates for the three things public-market minority investors don't get: control, synergies, and illiquidity compensation for private deals.
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Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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