The Role of Acquisition Experience in Acquirer-advisor Relationship Formation and Continuation

Abstract

We consider conditions under which firms hire an intermediary advisor in acquisition deals. Although acquirers pay large advisory fees to investment banks for their assistance in acquisitions, we know little about the conditions under which acquirers form a relationship with an investment bank for an acquisition deal. Specifically, we examine the role of overall acquisition experience, acquisition experience specific to the target’s industry, prior relationship-specific experience, and deal size in relationship formation and continuation. We test their hypotheses using a dataset of US-based acquirers and targets between 1991 and 2015. Our findings provide nuanced insights into the role of acquisition experience for acquirer–investment bank pairing up on acquisition deals.

Citation

Islam, M., Weigelt, C. and Park, H.D. (2022), "The Role of Acquisition Experience in Acquirer-advisor Relationship Formation and Continuation", Finkelstein, S. and Cooper, C.L. (Ed.) Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 21), Emerald Publishing Limited, Leeds, pp. 85-116. https://doi.org/10.1108/S1479-361X20220000021006