Investment banks as intermediaries in asset sell-offs

Based on a sample of asset sell-off transactions from January 1992 to December 2010, our results show that buyers are more likely to hire investment banks when the asset sell-off transactions are larger in both relative and dollar terms, when they use equity as payment, when they are in the technology sector, when they are in a different industry than the seller, and when the counterparty (seller) is in a foreign country. On the other hand, sellers are more likely to hire an investment bank when they are in a different industry than the buyer and the asset sell-off transactions are larger in both relative and dollar terms. Moreover, the overall economic conditions have marginal effects on the decision of the sellers to hire a top-tier investment bank. We also show that the hiring of an investment bank advisor influences the wealth effects of asset sell-off transactions. Both the buyer and seller are benefit from hiring their own investment banks.