On behalf of Intralinks, Cass Business School analysed M&A deals between 1994 and 2007. Cass analysed both disclosed and undisclosed M&A deals. It started with a database of 350,000 deals announced during the relevant period and filtered this to exclude privatisations and leveraged buyouts, as well as deals which had not closed and other deals which did not meet the parameters of the study.
Leaks were divided into three categories: pre-announcement leaks (someone in the know about the deal releases the information to the market causing a æpremature deal announcementÆ); leaks during the deal process prior to closing; and post-closing leaks (leaks after the deal has closed that could cause the deal to unravel). Cass focused on the first type of leaks, pre-announcement leaks and manually searched for leaks of information before the formal deal announcement on databases such as Factiva.
The study found that only half of leaked deals went on to complete. In contrast 72% of deals which did not leak completed. Leaked deals took 70% longer to complete compared to deals which stayed confidential, with the former taking 105 days on average versus 62 days for non-leaked deals.
Further, the leak did not result in the seller achieving a better price for the asset, with the premium paid by the winner on leaked deals on average 13% lower than deals which did not leak.
Intralinks uses technology to facilitate information flow on deals and 80% of its business originates from the financial services industry. With respect to M&A deals specifically it provides virtual data room services. Intralinks commissioned the study to highlight the importance of maintaining data confidentiality and integrity during the M&A process.
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