The Role of Internal M&A Teams in Takeovers
Review of Finance, forthcoming
53 Pages Posted: 14 Mar 2018 Last revised: 10 Nov 2023
Date Written: October 26, 2020
This paper provides insights into the inner workings of internal corporate M&A teams using survey evidence from 65 firms from Austria, Germany, and Switzerland. We find that internal teams create value, especially relative to external advisors, by directing transaction rationales, screening targets, and employing performance metrics to assess post-merger success. Teams emphasizing economic rationales as a merger motive are associated with higher returns than those teams more apt to consider behavioral motives. We consider several team characteristics and find that financial experience is the most persistent and significant attribute in explaining the outcomes across various deal stages. Another key result from our survey-based evidence is that latent M&A team factors explain approximately 54% of the acquirer fixed effects in announcement return regressions.
Keywords: Mergers and acquisitions, Internal M&A teams, Financial advisors, Takeover process, Acquirer returns
JEL Classification: G14, G34
Suggested Citation: Suggested Citation