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The added value of advisory services in SME mergers and acquisitions

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The objective of this study is to shed light on the added value of the services of five
disciplines in M&A advisory in the SME domain: accountants, bankers, business brokers,
fiscalists and lawyers. Theory is inconclusive in the added value of advisory services and
research on the subject is hardly available. RBV predicts direct benefits in using advisory
services in M&A, leading to less obstacles in and directly after M&A or lagged effects on
more renewal of the firm. The theory of structural holes, agency theory and management
entrenchment theory on the other hand predict neutral or negative effect of advisory services
in M&A.
The dataset includes 899 mergers and acquisitions (1) completed before 2003; (2) with an
acquirer having bought 100% of target shares or assets; (3) of German, Belgian or Dutch
origin; (4) of non-listed firms; (5) where acquirer and target firm are not member of the same
family. Using (M)ANOVA’s and controlling for the effects of more than one advisor
involved, the outcomes show consistently that the M&A advisory services do not reduce
obstacles like financing, misinformation and culture and staff problems during or immediately
after M&A. Looking at lagged effects of advisory services in the period of two years after
M&A strategic more renewal by innovation occurs if bankers, fiscalists and lawyers are
involved. Involvement of accountants and business brokers on the other hand decrease
renewal.


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