M&A Deal Leaks Are Being Plugged

November 18, 2015, 8:33 PM UTC
Photograph by Getty Images

Companies are doing a much better job keeping their acquisition talks under wraps, according to a new report today from Intralinks (IL) and the Cass Business School.

The report found that just 6% of mergers and acquisitions in 2014 involved a leak prior to a public announcement, compared to 8.8% in 2013 and a six-year average of 7.4%. In fact, 2014 represents the lowest level of leaks since Intralinks and Cass began keeping track in 2009, over which time it has charted more than 4,400 global transactions.

Source: M&A Leaks Report

One possible explanation for the decline could be increased regulatory enforcement against market abuses, including deal leaks and trying to profit from them.

“Regulatory enforcement, internal governance and the risks to the transactions are deterring more deal-makers from leaking deals,” explained Intralinks executive Philip Whitchelo, in a prepared statement. “As a result, sellers and their advisers are taking the issue of pre-announcement deal confidentiality much more seriously.”

In general, deals that leak early tend to have higher takeover price premiums than those that don’t (51.2% premium vs. 29.2%).

From a geographic perspective, Hong Kong has been the leakiest locale over the past six years, with 18.6% of its M&A activity hitting the news before a press release. It is followed by India (15.2%) and the U.K. (14.1%). The least leaky is Australia at 3.5%, while the U.S. came in at the 6.6% median.

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