The geography of M&A financial and legal advisors: international financial centres, legal complexity and the differentiation

Bryane Michael, Simon Zhao and Dariusz Wojick

Journal of Chinese Economic and Business Studies, 2020, vol. 18, issue 2, 115-133

Abstract: Why do companies engaged in cross-border M&A activities choose legal and financial advisors from international financial centres – rather than those in their same city? In this paper, we look at two factors driving the location decision of investment banks and law firms (and their client’s decision about which cities to look for advisors in). We find that these advisors balance two forces – ‘a legal complexity externality’ which comes from their jurisdiction’s law and their own decisions to differentiate from their competitors. We show how competition for M&A mandates has changed over time – particularly around China’s Going Out Policy. The policy has led to very large M&A flows, which provide the variation needed for econometric analysis.

Date: 2020
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DOI: 10.1080/14765284.2020.1780557

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