Non-competition covenants in acquisition deals


We study the changes in the consumers’ and producers’ surplus associated with acquisition deals where there is a non-competition covenant that forbids the seller from re-entering the market over a given time period. We find that these cquisition deals can lead to significant negative (positive) changes in the producers’ consumers’) surplus, which decrease significantly with the time period of the covenant. We also show that the effect of the time period of the covenant on the welfare change can be positive or negative. It depends largely on the market conditions, such as the profit uncertainty and growth rate.

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Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Additional Information: © 2016, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
Uncontrolled Keywords: non-competition covenants,acquisitions,real options
Publication ISSN: 1873-7374
Last Modified: 24 Apr 2024 07:13
Date Deposited: 31 Oct 2016 15:20
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Related URLs: https://www.sci ... 0970?via%3Dihub (Publisher URL)
PURE Output Type: Article
Published Date: 2016-06
Published Online Date: 2016-04-02
Accepted Date: 2016-03-30
Submitted Date: 2015-10-02
Authors: Azevedo, Alcino (ORCID Profile 0000-0002-4751-6085)
Pereira, Paulo J.
Rodrigues, Artur

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