The value-added role of industry specialist advisors in M&As

This paper examines the value-added role of industry specialist advisors in M&As. We find that compared to non-industry specialists, advisors specializing in the target industry help acquirers garner higher announcement returns. However, there is no significant difference in acquirer returns between advisors specializing in the acquirer industry and non-industry specialists. The choice of a specialist advisor in the target industry benefits acquirers most when there is significant information asymmetry surrounding the targets. Moreover, the bulk of value creation comes from small- to medium-sized financial advisors, rather than large, top-tier investment banks. Finally, our results suggest that advisors specializing in the target industry add value mainly through their ability to help acquirers purchase targets at a lower price.