A combined firm's decision to hire the target's financial advisor after acquisition: Does “service excellence” pay off?

Debarati Bhattacharya, Shih-Che Hsu, Wei-Hsien Li and Chun-Ting Liu

Finance Research Letters, 2019, vol. 29, issue C, 297-302

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 (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:29:y:2019:i:c:p:297-302

DOI: 10.1016/j.frl.2018.08.004

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