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Financial versus strategic buyer interest : initiation, competition and persistence during the private bidding process

Wouter De Maeseneire, Sébastien Dereeper, Mathieu Luypaert (UGent) and Mai Nguyen Thuy
(2025) MANAGERIAL FINANCE. 51(10). p.1581-1608
Author
Organization
Abstract
PurposeThis paper aims to explore how target firm attributes affect the interest and persistence of financial versus strategic bidders in the private stages of a corporate takeover process. We study strategic and financial bidder attraction from deal initiation onwards, as such it is unaffected by deal process characteristics or pricing strategies.Design/methodology/approachRelying on the Edgar filings published by the U.S. Securities and Exchange Commission (SEC), we hand-collected the number of strategic and financial bidders in each stage of the private bidding process for a sample of 606 takeovers announced between 2005 and 2016. To assess bidder interest, we use three proxies: bidder initiation, bidder competition in the private bidding process, and bidder persistence throughout the entire bidding process. In addition, we compare acquired targets to a matched control group of non-targets.FindingsOur results indicate that financial bidders, compared to strategic bidders, are more likely to display interest across the various private deal stages in targets with low market-to-book ratios, high cash flow generation and low R&D expenses. Financial buyers, hence, are particularly attracted when targets offer stand-alone value improvement potential or are undervalued, when cash flow generation allows for exploiting the benefits of debt financing and when technological innovation is low.Originality/valueThis paper is the first to investigate strategic versus financial bidder interest in the private phases of the M&A process, allowing us to explore true interest in specific targets rather than the outcome of a competitive deal process. Our results provide valuable insights into how targets' antecedents attract both types of bidders.
Keywords
Takeover, Competition, Financial buyer, Strategic buyer, Private bidding process, G230, G340, M210, D440, RESEARCH-AND-DEVELOPMENT, FREE CASH FLOW, LEVERAGED BUYOUTS, MANAGEMENT BUYOUTS, EQUITY, MARKET, FIRMS, MERGERS, DETERMINANTS, PERFORMANCE

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MLA
De Maeseneire, Wouter, et al. “Financial versus Strategic Buyer Interest : Initiation, Competition and Persistence during the Private Bidding Process.” MANAGERIAL FINANCE, vol. 51, no. 10, 2025, pp. 1581–608, doi:10.1108/mf-09-2024-0655.
APA
De Maeseneire, W., Dereeper, S., Luypaert, M., & Nguyen Thuy, M. (2025). Financial versus strategic buyer interest : initiation, competition and persistence during the private bidding process. MANAGERIAL FINANCE, 51(10), 1581–1608. https://doi.org/10.1108/mf-09-2024-0655
Chicago author-date
De Maeseneire, Wouter, Sébastien Dereeper, Mathieu Luypaert, and Mai Nguyen Thuy. 2025. “Financial versus Strategic Buyer Interest : Initiation, Competition and Persistence during the Private Bidding Process.” MANAGERIAL FINANCE 51 (10): 1581–1608. https://doi.org/10.1108/mf-09-2024-0655.
Chicago author-date (all authors)
De Maeseneire, Wouter, Sébastien Dereeper, Mathieu Luypaert, and Mai Nguyen Thuy. 2025. “Financial versus Strategic Buyer Interest : Initiation, Competition and Persistence during the Private Bidding Process.” MANAGERIAL FINANCE 51 (10): 1581–1608. doi:10.1108/mf-09-2024-0655.
Vancouver
1.
De Maeseneire W, Dereeper S, Luypaert M, Nguyen Thuy M. Financial versus strategic buyer interest : initiation, competition and persistence during the private bidding process. MANAGERIAL FINANCE. 2025;51(10):1581–608.
IEEE
[1]
W. De Maeseneire, S. Dereeper, M. Luypaert, and M. Nguyen Thuy, “Financial versus strategic buyer interest : initiation, competition and persistence during the private bidding process,” MANAGERIAL FINANCE, vol. 51, no. 10, pp. 1581–1608, 2025.
@article{01KEGZ9D83RA5JDCSSCG3A3K3P,
  abstract     = {{PurposeThis paper aims to explore how target firm attributes affect the interest and persistence of financial versus strategic bidders in the private stages of a corporate takeover process. We study strategic and financial bidder attraction from deal initiation onwards, as such it is unaffected by deal process characteristics or pricing strategies.Design/methodology/approachRelying on the Edgar filings published by the U.S. Securities and Exchange Commission (SEC), we hand-collected the number of strategic and financial bidders in each stage of the private bidding process for a sample of 606 takeovers announced between 2005 and 2016. To assess bidder interest, we use three proxies: bidder initiation, bidder competition in the private bidding process, and bidder persistence throughout the entire bidding process. In addition, we compare acquired targets to a matched control group of non-targets.FindingsOur results indicate that financial bidders, compared to strategic bidders, are more likely to display interest across the various private deal stages in targets with low market-to-book ratios, high cash flow generation and low R&D expenses. Financial buyers, hence, are particularly attracted when targets offer stand-alone value improvement potential or are undervalued, when cash flow generation allows for exploiting the benefits of debt financing and when technological innovation is low.Originality/valueThis paper is the first to investigate strategic versus financial bidder interest in the private phases of the M&A process, allowing us to explore true interest in specific targets rather than the outcome of a competitive deal process. Our results provide valuable insights into how targets' antecedents attract both types of bidders.}},
  author       = {{De Maeseneire, Wouter and Dereeper, Sébastien and Luypaert, Mathieu and Nguyen Thuy, Mai}},
  issn         = {{0307-4358}},
  journal      = {{MANAGERIAL FINANCE}},
  keywords     = {{Takeover,Competition,Financial buyer,Strategic buyer,Private bidding process,G230,G340,M210,D440,RESEARCH-AND-DEVELOPMENT,FREE CASH FLOW,LEVERAGED BUYOUTS,MANAGEMENT BUYOUTS,EQUITY,MARKET,FIRMS,MERGERS,DETERMINANTS,PERFORMANCE}},
  language     = {{eng}},
  number       = {{10}},
  pages        = {{1581--1608}},
  title        = {{Financial versus strategic buyer interest : initiation, competition and persistence during the private bidding process}},
  url          = {{http://doi.org/10.1108/mf-09-2024-0655}},
  volume       = {{51}},
  year         = {{2025}},
}
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