Control Premium

Investment Banking Glossary

Premium paid above the target's unaffected share price (the price prior to deal rumor) for control of the company: Control Premium = (Offer Price - Unaffected Price)/(Unaffected Price). Historically averages 25-40% for U.S. public-company deals; higher in competitive auctions and strategic transactions with material synergies, lower in negotiated sales, sponsor (LBO) deals, and distressed situations.

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