Abstract

http://ssrn.com/abstract=1787272
 
 

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The Impact of Common Advisors on Mergers and Acquisitions


Anup Agrawal


University of Alabama - Culverhouse College of Commerce & Business Administration

Tommy Cooper


University of Mississippi

Qin Lian


Louisiana Tech University - Department of Economics and Finance

Qiming Wang


Louisiana Tech University - Department of Economics and Finance

June 20, 2011


Abstract:     
We examine the conflict of interest that an investment bank faces when advising both the target and acquirer in a merger or acquisition (M&A) by investigating how common advisors affect deal outcomes. We compare M&As with common advisors to deals in which targets and acquirers use different advisors and account for the endogenous nature of this choice. We find that (1) deals with common advisors are less likely to be completed and take longer to resolve, and (2) sharing advisors does not affect the wealth gains of shareholders of targets, acquirers or the combined firm and the post-acquisition performance of acquirers. We find some evidence that valuation multiples paid for targets and deal premiums for public targets are significantly lower in transactions with common advisors, suggesting that common advisors tend to favor acquirers over targets, with an eye on future investment banking business from the larger, surviving firm. But most of our results suggest that common M&A advisors lead to neither better deal outcomes by facilitating information flow between targets and acquirers, nor worse deal outcomes by influencing both sides to hasten deal completion.

Number of Pages in PDF File: 65

Keywords: Mergers, Acquisitions, Investment Banking, M&A

JEL Classification: G24, G34, K22

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Date posted: March 17, 2011 ; Last revised: June 22, 2011

Suggested Citation

Agrawal, Anup and Cooper, Tommy and Lian, Qin and Wang, Qiming, The Impact of Common Advisors on Mergers and Acquisitions (June 20, 2011). Available at SSRN: http://ssrn.com/abstract=1787272 or http://dx.doi.org/10.2139/ssrn.1787272

Contact Information

Anup Agrawal (Contact Author)
University of Alabama - Culverhouse College of Commerce & Business Administration ( email )
Culverhouse College of Business
EFLS, Box 870224
Tuscaloosa, AL 35487-0223
United States
205-348-8970 (Phone)
205-348-0590 (Fax)
HOME PAGE: http://old.cba.ua.edu/personnel/AnupAgrawal.html
Tommy Cooper
University of Mississippi ( email )
PO Box 3986
Oxford, MS 38677
United States
Qin Lian
Louisiana Tech University - Department of Economics and Finance ( email )
Ruston, LA 71272
United States
Qiming Wang
Louisiana Tech University - Department of Economics and Finance ( email )
Ruston, LA 71272
United States
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