NEWSLETTER of February 7, 2020

The following content has been added at finexpert:

Oliver Wyman

THE STATE OF THE FINANCIAL SERVICES INDUSTRY 2020

In the financial services industry, a collision course is taking place between long-term vision and short-term performance. How companies resolve this conflict - between the desire to reposition the business for the long term and the need to remain disciplined and profitable in the short term - will determine the industry in the years ahead. This is the area of tension in which banks and other financial companies currently find themselves. Our "State of Financial Services 2020" report explains how to build the financial services provider of the future without neglecting current targets. >more

Lazard

2019 ANNUAL REVIEW OF SHAREHOLDER ACTIVISM

Lazard's annual review of shareholder activism compiles and analyzes data on key activism trends globally. Overall European activity decreased in 2019 (48 campaigns, down from a record 57 in 2018), driven primarily by 10 fewer campaigns in the U.K. A record 147 investors launched new campaigns in 2019, including 43 “first timers” with no prior activism history. >more

IHS Markit | Mergermarket

M&A PREPAREDNESS: HOW TO PLAN FOR YOUR NEXT TRANSACTION

The M&A sale process has evolved immensely in recent decades, as buyers have become increasingly sophisticated and demanding. As a result, the preparation process for deal targets has necessarily become more rigorous – posing ongoing challenges for the sell-side of a transaction. For this report, IHS Markit commissioned Mergermarket to survey dealmakers from corporate entities, investment banks, private equity and venture capital firms to find out how the deal preparation process has evolved and the challenges sellers face that threaten to stall deals or erode value. >more

PwC

SUPERIOR PE RETURNS WITH INVESTMENTS IN GERMAN IT ASSETS

Private equity investments in the German IT sector have risen steadily over the last 20 years, reaching a new record level of 9.5 billion euros in 2019. How profitable are these investments from the perspective of private equity houses and which strategies are particularly successful? The new PwC study "Superior PE returns with investments in German IT assets" answers this question. >more

DOES GENDER DIVERSITY IN BANK BOARDS MATTER? EVIDENCE FROM PUBLIC BAILOUTS

Giovanni Cardillo, Enrico Onali, and Giuseppe Torluccio
2019
We are the first to examine the impact of gender diversity in bank boards on the probability and size of public bailouts. Our findings, based on a sample of listed European banks over the period 2007-2013, suggest that banks with a more gender-diverse board are less likely to receive a public bailout, and receive a lower amount of bailout funds (in the form of credit lines and capital injections) as a percentage of total assets. Specifically, an increase by one standard deviation in gender diversity decreases the probability of a bailout by at least 4%. Gender diversity is also negatively related to bank risk as proxied by the ratio of non-performing loans to total loans and positively related to bank profitability as proxied by ROA. Furthermore, consistent with previous literature, we also find that more gender-diverse bank boards have higher payout ratios, consistent with an agency costs hypothesis. >more

WILL I GET PAID? EMPLOYEE STOCK OPTIONS AND MERGERS AND ACQUISITIONS

Ilona Babenko, Fangfang Du, and Yuri Tserlukevich
2019
We analyze how employee compensation contracts of target firms affect merger terms and outcomes. Using unique data from merger agreements, we document that in 80.0% of all M&A deals at least some of the target's ESOs are canceled by the acquirer and not replaced by new equity-based grants. Contract modifications reduce the value of employee stock options by 38.4% in the average M&A deal. Further, the combined merger returns are larger when employees experience greater losses. Overall, our results indicate that the benefits of reducing the number of employee stock options outweigh potential negative effects on firm value. >more