Target Insiders’ Preferences When Trading Before Takeover Announcements : Deal Completion Probability, Premium and Deal Characteristics

We contribute to the M&A literature by characterizing the information available to insiders of selling firms during the pre-public takeover negotiations by analyzing insider trading during this period. We show that target insiders increase their net purchases only once bidders start signing confidentiality agreements, once the deal becomes more certain and insiders possess more precise information. Also, insiders have a good grasp of deal success and completion probability. Finally, insider net purchases during the pre-public takeover negotiations are in line with insiders guessing well the final offer price, but they additionally reflect insiders' knowledge of deal characteristics