Why certain deals don't disclose transaction price?
I was using Capital IQ to research historical transactions to gain a better insight into a firm which I will have an informational interview with. Couldn't seem to find the transaction price for lots of deals. Why? Is it because the deal was too small? I am trying to understand the rationale behind the behavior of disclosing vs not disclosing the price. Thanks
Could be that or could be the opposite - some firms don't want to let others know they were overvalued e.t.c. Or just personal preference - some firms want a lot of info to stay private
Unless there is a regulatory requirement of some sort, there's no upside to disclosing the price you paid and only downside because it shows your hand to some degree and there's just no reason why the public needs to know that information. When we really want to know the price that one of our competitors paid we can usually get it from having conversations with peers in our space or through general market intel like talking to bankers.
What you'll also see on CapIQ a lot is that firms will disclose the equity value, re: how much a firm paid to acquire the equity portion. But net debt, etc, isn't disclosed (to get to Enterprise Value) because honestly there is no advantage from letting competitors / strategics / sponsors know how levered you are
Because the terms can be used against you in future transactions. A potential seller can use it as leverage against you... "you paid x for a similar transaction. Why are you valuing us for less?"
I think this is the biggest reason, especially in the private equity space. PE firms want to buy cheap and exit high - will make the sales story significantly harder in 3-5 years if everyone can point to their original multiple they paid
They're private and don't have to or the deal is very small for the acquiror and relatively immaterial.
Another point is regarding the privacy of the sellers. Think about a privately held family company, which has 100% of its shares acquired by a multinational company. Think on a much smaller scale: this family lives in a small countryside town, where everybody knows who they are. Disclosing the transaction price (meaning that the family possibly got millionaire) attracts all kinds of attention (think about the worst consequences of this).
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