Leaked M&A deals are less likely to complete, but if they do go through, the bid premium is often higher than non-leaked ones


Although the number of deals that are leaked has fallen since 2008, the consequences of leaking can still be significant. The M&A Research Centre at Cass and Intralinks, a global provider of technology solutions for secure information sharing, content management and enterprise collaboration focused on the M&A, private equity and debt capital markets, found that M&A deals that are leaked are 8 percentage points less likely to complete, but produce a 23 percentage points higher bid premium on average.


In the 2004-7 period, 11% of potential global M&A deals exhibited significant pre-announcement trading, or SPAT, which is an indicator of deals leaking to the public prematurely. In the UK, however, the number of such deals was 22%, the highest of the leading M&A markets. In the period 2010-2012 those numbers decreased to 7% and 13% respectively.

Although less endemic than it was, leaking can still affect deals. For example, if details of a deal are leaked prematurely, a second potential bidder gains valuable information and time. Additionally, if a friendly bid is leaked, it may pre-empt the 'fait accompli' of a joint bid statement and allow a second bidder to enter with a good chance of success.


Cass Consulting analysed over 4,000 M&A transactions sourced from SDC Platinum between 1 January 2004 and 16 October 2012 for SPAT activity by identifying unusual share price movements in relation to index movements, using information from Thomson Reuters DataStream. The consultants found that there had been a decrease in the amount of SPAT since the high-water mark of the period 2004-2007, when 11% of deals were leaked, down to 7% in 2010-2012.

Complementing the Cass research, over 30 interviews of M&A practitioners were also carried out by Mergermarket, an M&A IP provider, in order to understand the 'why' of the analysis. Those interviewed agreed that this was largely a result of increased regulatory enforcement in the UK since 2008.


SPAT can also have negative effects, the report found. Leaked deals take longer to complete, with an average of 124 days between announcement and completion compared to 116 days for non-leaked deals. In the more recent period, they are also less likely to complete than non-leaked deals, with 80% of leaked deals completing in 2010-2012, compared to 88% of deals where there was no SPAT.

Cass also found that leaked deals typically had a higher bid premium than non-leaked ones. In cases where there was SPAT, the bid premium was 53%, compared to 30% when there was no SPAT, in the period 2010-2012. In addition, leaked deals delivered higher long term returns than non-leaked deals, with the average difference being eight percentage points.

Cass consultants:

Scott Moeller

The director of the M&A Research Centre at Cass Business School, Prof Moeller wasformerly CEO and Director of Executive Education at the school. He was previously Global Head of Deutsche Bank's corporate venture capital unit and before that worked for Booz Allen & Hamilton Management Consultants and Morgan Stanley. He is currently is a non-executive director on several corporate boards.

Anna Faelten

Anna Faelten is Deputy Director of the M&A Research Centre at Cass Business School, and also teaches M&A on the MSc programme. She consulted the UK Government's Department for Business, Innovation and Skills (BIS) on the economic impact of M&A in the UK and regularly carries out research on global M&A for businesses. She was previously editor of the corporate finance publication Deal Monitor.

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