When Expertise Matters Most – The Efficiency of M&A Advisors’ Industry Expertise in Complex Transactions

56 Pages Posted: 2 Mar 2012 Last revised: 7 Jul 2016

Pascal Stock

University of Mannheim - Department of Finance and Accounting & Taxation

Multiple version iconThere are 2 versions of this paper

Date Written: November 17, 2015

Abstract

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

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

Pascal Stock (Contact Author)

University of Mannheim - Department of Finance and Accounting & Taxation ( email )

University of Mannheim
Schloss, SO 205
D-68131 Mannheim
Germany
+49/621/181-3249 (Phone)

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