Loan price in mergers and acquisitions

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We investigate loan price in mergers and acquisitions (M&As), using hand-matched loan information for a sample of 512 U.S. M&A transactions. We find the relative size of a deal constitutes a prominent determinant of the loan price measured by the all-in spread drawn (AISD). This result is robust to several specifications that address endogeneity concerns. Cross-sectional analyses show that aggravated credit risk and information uncertainty after M&A go some way towards explaining lenders' concerns over large relative deal size. Further analysis demonstrates higher AISD is associated with lower post-transaction performance, indicating loan price factors in the risk of poor post-transaction performance correctly.
Original languageEnglish
Article number101754
JournalJournal of Corporate Finance
Early online date17 Oct 2020
Publication statusPublished - Apr 2021


  • Loan price
  • Mergers and acquisitions (M&As)
  • Post-acquisition performance
  • Relative deal size


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