Leaks typically arise when insiders or related parties informally disclose information—often amplified through social media. Sometimes, these leaks are strategic and intentional, used to test stakeholder reactions or manipulate market dynamics. Other times, they are accidental and damaging.
Controlled leaks, when used intentionally, can help gauge market sentiment. However, uncontrolled leaks can disrupt negotiations, trigger premature speculation, and create confusion among employees and partners. Worse, they may invite hostile bids from rivals.
A joint study by SSC Interlinks and Bayes Business School (University of London) revealed that between 2008 and 2023:
The global average of M&A deal leaks was 8%.
APAC saw the highest leak rates: Hong Kong (14%), South Korea (12%), and India (11%).
Australia had the lowest (4%), while the U.S. matched the global average (8%).
Interestingly, leaked deals fetched an average 50% premium, compared to 26% for non-leaked deals. However, the deal completion times and success rates remained similar (around 86 days and 87–88% respectively).
Risks and Recommendations:
Leaks can fuel insider trading and inflate acquisition costs.
Confidentiality measures like a robust CIM (Confidential Information Memorandum) and NDA (Non-Disclosure Agreement) are crucial.
A top-down culture of confidentiality helps minimize unintended disclosures.
Conclusion:
While some leaks can be tactically beneficial, the risks often outweigh the gains. Managing confidentiality is key to preserving deal integrity and stakeholder trust.