Does it pay to hire top investment bankers in M & As?
Dean Travlos and his co-authors provide an answer.
Although top investment bankers advising acquiring firms in Mergers and Acquisitions (M & As) charge higher fees for their services relative to non-top bankers, prior evidence fails to find a positive link between investment banker reputation and quality of the deal. In a recent paper, published in the Journal of Finance (February 2012), Dean Nickolaos Travlos, along with his co-authors Andrey Golubov of the Cass Business School and Dimitris Petmezas of the University of Surrey, report that bidders in 5,000 U.S. public acquisition deals conducted in the period 1996-2009 employing a top-tier investment banker enjoy abnormal stock returns just over 1% higher than if they had employed a non top-tier investment banker. This is equivalent to bidders gaining USD 65.83 million in shareholder value for an average M & A deal after considering the investment banker fees.=
Click here to see the post in The Economist