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Do boutique investment banks have the Midas touch? Evidence from M&As

Do boutique investment banks have the Midas touch? Evidence from M&As

Alexandridis, George, Antypas, Nikolaos and Lee, Vicky (2023) Do boutique investment banks have the Midas touch? Evidence from M&As. European Financial Management. ISSN 1354-7798 (Print), 1468-036X (Online) (In Press) (doi:

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The M&A advisory space has seen a profound shift since 2000s with boutique investment banks emerging as major competitors for bulge bracket and other full-service corporate financiers. We study whether the explosive rise of boutiques is justified by their M&A buyside success. Using the U.S. domestic deals during the period 2000 to 2016, we perform short- and long-term event study analyses to estimate shareholder wealth effects on boutique-led M&As. We document that acquiring firms represented by boutique advisors generate significantly higher abnormal returns than those advised by full-service banks in difficult-to-value transactions with greater information asymmetry. These deals include private target deals, cross-industry acquisitions, and deals involving inexperienced bidders in the target sector. In these deals, boutique advisors reduce information asymmetry on the target firm and accrue more value creation to acquirers than do full-service banks using their distinctive knowledge and expertise in the target industry. Our study provides important implications for conventional wisdom on the role of financial advisors in M&As.

Item Type: Article
Uncontrolled Keywords: mergers and acquisitions; boutique advisors; value creation
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 28 Apr 2023 13:46

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