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By Michael Karpathios
Average control premiums have almost doubled throughout the COVID-19 pandemic, rising from 32 per cent in 2019 to 61 per cent in 2020, a new study has shown.
A control premium consists of the amount a buyer is willing to pay above the current traded share price to gain a controlling interest in a publicly traded company.
RSM’s 2021 Control Premium Study, conducted in partnership with Curtin University, analysed 601 successful control transactions for companies traded on the ASX and 131 transactions on NZSX from 1 July 2005 through to 31 December last year, revealing a strong lift in premiums exacerbated by the COVID pandemic.
According to the results, the rise in control premiums between 2019 and 2020 significantly diverges from the long-term Australian average of 34.7 per cent recorded over a 15.5-year period.
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