A Combined Firm’s Decision to Hire the Target’s Financial Advisor After Acquisition: Does 'Service Excellence' Pay Off?

15 Pages Posted: 6 Sep 2018 Last revised: 1 Dec 2019

See all articles by Debarati Bhattacharya

Debarati Bhattacharya

Duquesne University

Shih-Che Hsu

Vanguard International Semiconductor Corporation

Wei-Hsien Li

National Central University at Taiwan - Department of Finance

Chun-Ting Liu

KGI Securities Investment Advisory

Date Written: July 7, 2018

Abstract

This paper explores three reasons why after the completion of an M&A deal, the combined firm chooses to hire the target’s financial advisor, with whom the acquiring firm has no prior relationship. We find that the likelihood of hiring the target’s advisor improves when it provides superior service to the target, if it is a reputable investment bank or when the target’s management is more likely to be retained by the combined firm. Our evidence suggests that the “service excellence” demonstrated by investment banks is valuable not only for enhancing their ongoing business relationships, but also for securing future business.

Keywords: M&As, Financial Advisors

JEL Classification: G34, G14

Suggested Citation

Bhattacharya, Debarati and Hsu, Shih-Che and Li, Wei-Hsien and Liu, Chun-Ting, A Combined Firm’s Decision to Hire the Target’s Financial Advisor After Acquisition: Does 'Service Excellence' Pay Off? (July 7, 2018). Finance Research Letters, 29, 297-302 (2019). Available at SSRN: https://ssrn.com/abstract=3239569

Debarati Bhattacharya (Contact Author)

Duquesne University ( email )

600 Forbes Ave.
Pittsburgh, PA 15282
United States
412.396.2621 (Phone)

HOME PAGE: http://www.duq.edu/academics/schools/business/faculty/bhattacharya-phd-debarati

Shih-Che Hsu

Vanguard International Semiconductor Corporation ( email )

No. 123, Park Ave.
3rd Hsinchu Science Park
Hsinchu
Taiwan

Wei-Hsien Li

National Central University at Taiwan - Department of Finance ( email )

No. 300, Jung-da Rd.
Jung-Li
Taoyuan
Taiwan

Chun-Ting Liu

KGI Securities Investment Advisory ( email )

No. 700, Mingshui Rd.
Zhongshan District
Taipei
Taiwan

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