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ARTICLE · 16 DECEMBER 2022

The developing world of pre-bid stake structures in M&A

Corrs Chambers Westgarth
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Pre-bid stakes were more prevalent in 2022 – used on 47% of all deals, a 14% jump from the previous survey period.

AustraliaCorporate/Commercial Law
Sandy Mak
Sandy Mak
Adam Foreman
Adam Foreman
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Pre-bid stakes not only provide the bidder with a seat at the target's table for engagement purposes, it can act as a significant deterrent to rival bidders.

Our M&A 2023 Outlook found pre-bid stakes were much more prevalent this year – with pre-bids used on 47% of all deals, which is a 14% jump from the previous survey period.

This reflects both improved market conditions, with lower relative equity markets and more stable economic conditions, and a growing recognition of their strategic importance for deals. It also reflected an increase in opportunistic bids from existing shareholders. Bidders had some form of pre-bid stake on almost 50% of deals, taking the forms of direct stakes, call options, pre-existing stakes and voting agreements.

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