Conflicts of Interest and the Role of Financial Advisors in M&A Transactions: Empirical Evidence from the Private Equity Industry
Series
SoF Working Paper Series
Type
working paper
Date Issued
2015
Author(s)
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.
Language
English
Keywords
Private Equity
Mergers and Acquisitions
Financial Advisors
Conflicts of Interest
HSG Classification
contribution to scientific community
HSG Profile Area
None
Refereed
No
Publisher
SoF-HSG
Publisher place
St. Gallen
Number
2015/15
Pages
40
Subject(s)
Division(s)
Contact Email Address
stefan.morkoetter@unisg.ch
Eprints ID
243249
File(s)![Thumbnail Image]()
Name
15_15_Morkoetter et al_Conflicts of Interest and the Role of Financial Advisors.pdf
Size
389.79 KB
Format
Adobe PDF
Checksum (MD5)
4fd00d2cebddbe822408c88f0ae65f0b