The value-added role of industry specialist advisors in M&As

Michael Graham, Terry S. Walter, Alfred Yawson, Huizhong Zhang

Research output: Contribution to journalArticleResearchpeer-review

17 Citations (Scopus)

Abstract

This paper examines the value-added role of industry specialist advisors in M&As. We find that compared to non-industry specialists, advisors specializing in the target industry help acquirers garner higher announcement returns. However, there is no significant difference in acquirer returns between advisors specializing in the acquirer industry and non-industry specialists. The choice of a specialist advisor in the target industry benefits acquirers most when there is significant information asymmetry surrounding the targets. Moreover, the bulk of value creation comes from small- to medium-sized financial advisors, rather than large, top-tier investment banks. Finally, our results suggest that advisors specializing in the target industry add value mainly through their ability to help acquirers purchase targets at a lower price.

Original languageEnglish
Pages (from-to)81-104
Number of pages24
JournalJournal of Banking and Finance
Volume81
DOIs
Publication statusPublished - Aug 2017
Externally publishedYes

Keywords

  • Abnormal returns
  • Acquirers
  • Cross-industry deal
  • Industry specialist advisors

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