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

Item Type Monograph (Working Paper)
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.

Authors Morkötter, Stefan & Wetzer, Thomas
Language English
Keywords Private Equity, Mergers and Acquisitions, Financial Advisors, Conflicts of Interest
Subjects business studies
HSG Classification contribution to scientific community
HSG Profile Area None
Refereed No
Date 2015
Publisher SoF-HSG
Place of Publication St. Gallen
Series Name SoF Working Paper Series
Number 2015/15
Number of Pages 40
Contact Email Address stefan.morkoetter@unisg.ch
Depositing User Prof. Dr. Stefan Morkötter
Date Deposited 17 Aug 2015 15:41
Last Modified 11 Apr 2017 06:22
URI: https://www.alexandria.unisg.ch/publications/243249

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Citation

Morkötter, Stefan & Wetzer, Thomas: Conflicts of Interest and the Role of Financial Advisors in M&A Transactions: Empirical Evidence from the Private Equity Industry. SoF Working Paper Series, 2015, 2015/15.

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https://www.alexandria.unisg.ch/id/eprint/243249
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