Conflicts of Interest and the Role of Financial Advisors in M&A Transactions: Empirical Evidence from the Private Equity Industry

Stefan Morkoetter and Thomas Wetzer ()

No 1515, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: Financial advisors play an important role in M&A transactions. Private equity (PE) firms, in turn, are highly sought-after clients for financial advisors as they promise lucrative business due to their frequent engagements in acquisitions. We find that PE firms pay, on average, less for portfolio companies when their sell-side advisor has worked for the acquiring PE firm on the buy-side in past transactions. We refer to this as indirect relationships and argue that conflicts of interest be-tween financial advisors and their clients are the main driver for our results. Strategic acquirers do not benefit from these previous indirect relationships altogether.

Keywords: Private Equity; Mergers and Acquisitions; Financial Advisors; Conflicts of Interest (search for similar items in EconPapers)
JEL-codes: G15 G24 G32 G34 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-08, Revised 2017-04
New Economics Papers: this item is included in nep-cfn and nep-fmk
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1515.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usg:sfwpfi:2015:15

Access Statistics for this paper

More papers in Working Papers on Finance from University of St. Gallen, School of Finance Contact information at EDIRC.
Bibliographic data for series maintained by ().