56 Pages Posted: 2 Mar 2012 Last revised: 7 Jul 2016
Date Written: 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.
Keywords: Mergers & Acquisitions, Acquisition Sequence, Advisory Expertise, Acquisition Returns
JEL Classification: G34, G24
Suggested Citation: Suggested Citation
Stock, Pascal, When Expertise Matters Most – The Efficiency of M&A Advisors’ Industry Expertise in Complex Transactions (November 17, 2015). Available at SSRN: https://ssrn.com/abstract=2014741 or http://dx.doi.org/10.2139/ssrn.2014741