Motivations and Consequences of Advisor Participation in Mergers and Acquisitions

Marcelo Daniel Araújo Ermel and Roy Martelanc

RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), 2018, vol. 22, issue 6, 859-884

Abstract: Mergers and Acquisitions (M&A) is a widely studied subject in finance. A question that remains unanswered is the role and impact of the advisor’s choice in the process of acquiring or merging. The current literature focuses on studying the US market/developed countries with different characteristics of an emerging market oriented toward the ownership of firms. Using data from more than 7,000 operations, this paper investigates the role of advisors in the negotiation and success rate and seeks to determine the characteristics for their participation. Linear and logistic regression revealed that the advisors play an active role due to the significantly longer period between the announcement and conclusion of the deal in which they participated. We also identified a higher success rate in comparison with in-house deals. Regarding the determinants, complexity, size of the deal, the acquirer’s previous experience in M&A, and payment entirely in shares increases the probability of hiring an advisor.

Date: 2018
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