The role of investment banks in M&A transactions: Fees and services

Terry S. Walter*, Alfred Yawson, Charles P W Yeung

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)


We examine the pricing and performance of advisers in M&A transactions. We determine adviser quality on the basis of a contemporaneous market share measure and show that high quality advisers receive higher M&A advisory fees. High quality advisers also complete deals faster, but their superiority is not reflected in increasing the likelihood of deal completion or delivering greater abnormal equity returns to their clients. It is well known that stock bids are received more negatively than cash bids, so we further partition the sample of acquirers by consideration type and examine the abnormal returns of each partition. We find that high quality investment banks are able to differentiate themselves by delivering greater abnormal returns to their acquirer clients in deals involving stock.

Original languageEnglish
Pages (from-to)341-369
Number of pages29
JournalPacific-Basin Finance Journal
Issue number4
Publication statusPublished - Sep 2008


  • Advisory fees
  • Investment banks
  • Quality premium
  • Stock bids


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