Save Me from a Failed Merger: Advisor Skill in Deal Screening and Completion

Tim Mooney, Valeriy Sibilkov
2011 Social Science Research Network  
Existing literature argues that acquirers' emphasis on deal completion in advisory relationships may interfere with value creation. We examine whether these advisory relationships are driven by acquirers seeking to complete mergers unconditionally, regardless of value implications, or to screen out value-destroying deals, including those likely to fail. Advisors with stronger records of completing announced mergers are associated with more certain future deal completion and more favorable
more » ... er's announcement period returns. Results suggest that some advisors possess deal-screening expertise, and that this expertise is observable through a high ratio of announced to completed mergers. Results also reveal that only acquirers with strong governance take advantage of advisors' deal screening expertise. JEL Classification: G24, G32, G34
doi:10.2139/ssrn.1742823 fatcat:qhz7vhldl5dbfnf53lzxnkbgg4