The Relationship Between Target and Its Financial Advisor in Mergers and Acquisitions -- Are There Still Benefits to Gain?
(2014) NEKH01 20132Department of Economics
- Abstract
- We aim to measure the effect of relationship building between target-firm and financial advisor in the Mergers and Acquisitions industry. We also aim to investigate what affects the target-firm’s decision to stay loyal or switch financial advisor.
Our main findings show that relationship building does not have a significant effect on the advisor fee and speed of transaction. Instead of earlier cooperation as representing relationships, transaction-oriented variables such as size of transaction and amount sought in the target-firm, have a larger influence on advisor fee and speed. Even though benefits as lower advisor fee and a quicker closed deal, will not be gained by building a relationship, target-firms still tend to stay loyal to... (More) - We aim to measure the effect of relationship building between target-firm and financial advisor in the Mergers and Acquisitions industry. We also aim to investigate what affects the target-firm’s decision to stay loyal or switch financial advisor.
Our main findings show that relationship building does not have a significant effect on the advisor fee and speed of transaction. Instead of earlier cooperation as representing relationships, transaction-oriented variables such as size of transaction and amount sought in the target-firm, have a larger influence on advisor fee and speed. Even though benefits as lower advisor fee and a quicker closed deal, will not be gained by building a relationship, target-firms still tend to stay loyal to their financial advisors when transactions are large (>$1 000 000 000), when they are cooperating with one of the top banks or when they already have had an earlier cooperation with that particular advisor. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/4301087
- author
- Gjörup, Alexander LU and Sarmes, Aleksandra LU
- supervisor
-
- Ola Bengtsson LU
- Dag Rydorff LU
- organization
- course
- NEKH01 20132
- year
- 2014
- type
- M2 - Bachelor Degree
- subject
- keywords
- Relationship banking, Investment Banking, Asymmetrical Information, Target, Mergers & Acquisitions, Financial Advisor
- language
- English
- id
- 4301087
- date added to LUP
- 2014-02-12 09:06:34
- date last changed
- 2014-02-12 09:06:34
@misc{4301087,
abstract = {{We aim to measure the effect of relationship building between target-firm and financial advisor in the Mergers and Acquisitions industry. We also aim to investigate what affects the target-firm’s decision to stay loyal or switch financial advisor.
Our main findings show that relationship building does not have a significant effect on the advisor fee and speed of transaction. Instead of earlier cooperation as representing relationships, transaction-oriented variables such as size of transaction and amount sought in the target-firm, have a larger influence on advisor fee and speed. Even though benefits as lower advisor fee and a quicker closed deal, will not be gained by building a relationship, target-firms still tend to stay loyal to their financial advisors when transactions are large (>$1 000 000 000), when they are cooperating with one of the top banks or when they already have had an earlier cooperation with that particular advisor.}},
author = {{Gjörup, Alexander and Sarmes, Aleksandra}},
language = {{eng}},
note = {{Student Paper}},
title = {{The Relationship Between Target and Its Financial Advisor in Mergers and Acquisitions -- Are There Still Benefits to Gain?}},
year = {{2014}},
}