When Expertise Matters Most – The Efficiency of M&A Advisors’ Industry Expertise in Complex Transactions
University of Mannheim - Department of Finance and Accounting & Taxation
November 17, 2015
This study extends the neoclassical theory of M&As by analyzing the efficiency of bank advisors’ industry expertise. Advising banks’ industry expertise, besides their quality and reputation, positively affects acquirers’ acquisition performance. It is associated with higher returns, a shorter time to resolve the bid, a higher completion probability and a higher probability to complete value-increasing acquisitions and to withdraw from value-destroying ones. The positive industry expertise effect is observed in complex transactions into which better skilled banks are selected. Complex transactions have a worse performance than simpler unadvised ones. Banks’ industry expertise enables them to compensate this negative performance-selection effect.
Number of Pages in PDF File: 56
Keywords: Mergers & Acquisitions, Acquisition Sequence, Advisory Expertise, Acquisition Returns
JEL Classification: G34, G24
Date posted: March 2, 2012 ; Last revised: July 7, 2016
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