The Mystique of the Boutiques: The Wealth Effects of Boutique Banks in Mergers and Acquisitions

40 Pages Posted: 2 Apr 2020 Last revised: 3 Mar 2021

See all articles by Samer Adra

Samer Adra

University of Birmingham

Leonidas G. Barbopoulos

University of Edinburgh

Elie Menassa

University of Balamand

Date Written: March 9, 2020

Abstract

We provide the first comprehensive examination of the impact of the advisory services provided by boutique banks on acquirer returns in U.S. Mergers and Acquisitions (M&As). We show that the autonomy and expertise of boutique banks help acquirers realize significant gains in informationally demanding deals. We find that boutique banks add value to acquirers of large private companies in the short-run. Acquirers of small private companies also benefit from boutique banks, but these wealth effects are only pronounced in the post-announcement period. We attribute the delayed market response to the limited activity of information-driven traders at the time of the announcement of small private deals. We also show that resourceful acquirers recognize the valuable services offered by boutique banks and are more likely to involve them in private target deals. Lastly, we present novel evidence that boutique banks contribute to wealth creation in small public target M&As that are economically consequential for the acquirer. This result emerges only after we address endogeneity concerns by controlling for the acquirer’s quality.

Keywords: Financial advisors; Boutique banks; Mergers and Acquisitions; Private target companies; Small public targets; Abnormal returns

JEL Classification: G14, G34

Suggested Citation

Adra, Samer and Barbopoulos, Leonidas G. and Menassa, Elie, The Mystique of the Boutiques: The Wealth Effects of Boutique Banks in Mergers and Acquisitions (March 9, 2020). Available at SSRN: https://ssrn.com/abstract=3551213 or http://dx.doi.org/10.2139/ssrn.3551213

Samer Adra (Contact Author)

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Leonidas G. Barbopoulos

University of Edinburgh ( email )

University of Edinburgh Business School
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

Elie Menassa

University of Balamand ( email )

Lebanon

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
57
Abstract Views
336
rank
448,607
PlumX Metrics