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The Immediate and Lagged Effects of Advisory Support in SME Mergers and Acquisitions: A Buyer’s Perspective.

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The objective of this study is to shed light on the added value of the advisors in SME mergers or acquisitions: accountants, business brokers, tax consultants and lawyers. Theory is inconclusive on the added value of advisory services and research is rare. RBV predicts direct advantages for using advisory services in M&A: fewer obstacles during and directly after M&A and lagged beneficial effects involving more renewal in the firm. The theory of structural holes, agency theory and management entrenchment theory, on the other hand, predict neutral or negative effects from advisory services in M&A. The dataset includes 855 SME mergers and acquisitions in three countries, where the acquirer and target firm did not belong to the same family. Using binary logistic regressions the results show consistently that the M&A advisory services do not reduce the occurrence of obstacles in M&A, but for the positive impact of tax consultants on financial shortfalls and misinformation. However more renewal in the two years after acquisition can be observed when several advisors are involved, particularly so lawyers and bankers. The outcomes suggest that not one theory is able to predict both the immediate and lagged effects of advisory services. The theory of structural holes/agency/entrenchment predicts immediate effects best, while RBV predicts lagged effects best. The database and research design have some limitations. More fine grained hypotheses and measurements are recommended for future research.


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