M&A deal leaks are in steep decline

Screaming headlines may suggest that the amount of leaked M&A deals are on the rise, but new Intralinks research conducted with the London-based M&A Centre at the Cass Business School tells another story.


19 April 2013

Screaming headlines may suggest that the amount of leaked M&A deals are on the rise, but new Intralinks research conducted with the London-based M&A Centre at the Cass Business School tells another story.

The research examined over 4,000 deals over from 2004 to 2012, looking for tell-tale signs that strongly suggest a leak has occurred. Results showed that the volume of leaked deals fell from a peak of 11% from 2008-2009, to a low of 7% during 2010-2012. In interviews, dealmakers suggested three main reasons for this fall: better tools for maintaining confidentiality, stricter regulatory enforcement and a slowdown in the dealmaking environment, where buyers aren’t as likely to encourage rival bids and sellers are more cautious of complicating and delaying bid discussions.

Few have argued with the overall findings, but some are asking if tighter regulatory enforcement may actually spur leaks. In his recent Reuters column Crackdowns Only Make M&A Leaks More Tempting, Jeffrey Goldfarb points out that while the volume of leaked deals has declined, the premiums paid for these deals has actually increased:

The rewards of indiscretion have increased. Five years ago, the researchers discovered little difference in the takeover premiums paid for the two sets of deals from 1994 to 2007. Over the last few years, leaked deals attracted a sharply larger premium – 53 percent versus 30 percent… All else being equal, a $1 billion company being sold quietly would, according to the findings, fetch $1.3 billion. The price tag for a leaked deal would be $1.53 billion. Assuming a 3 percent fee, a banker would either have an 88 percent chance of pocketing $39 million or an 80 percent chance of $46 million.

It’s hard to show a correlation between the volume of leaks and the premiums paid, or the effects of regulations across different jurisdictions, but there’s no question that despite the risks, the temptation to leak is ever present.



Ian Bruce

Ian Bruce

Ian Bruce is the VP of Corporate Communications at Intralinks. He has 20 years of international marketing experience across software, hardware, consulting, and financial services at both VC-backed start-ups and large multinationals. Prior to joining Intralinks, Ian held various marketing and communications roles at Avid Technology, HP, Novell, Systinet, and CSC.