Identifying M&A targets and the information content of VC/PEs

Citations of this article
Mendeley users who have this article in their library.


The information gap in the M&A market hinders acquirers from effectively identifying high-quality targets. We examine whether VC/PEs convey information content in the M&A market and whether acquirers can use such information to identify high-quality targets. We show that VC/PEs have significant information content and can signal high-quality target companies via “certification”. When acquirers lack acquisition experience and targets are located in inferior information environments, VC/PE “certification” is more significant. The better reputation a VC/PE has, the more information it conveys. Syndicate VC/PEs convey stronger information than independent VC/PEs. We also find that acquirers do not pay higher premiums for high-quality targets. Overall, our results suggest that VC/PEs have value relevance in the M&A market, confirming their “certification” role. We present means for acquirers to select high-quality targets and investors to build efficient portfolios.




Tang, Q., & Li, W. (2018). Identifying M&A targets and the information content of VC/PEs. China Journal of Accounting Research, 11(1), 33–50.

Register to see more suggestions

Mendeley helps you to discover research relevant for your work.

Already have an account?

Save time finding and organizing research with Mendeley

Sign up for free