The Mystique of the Boutiques: The Wealth Effects of Boutique Banks in Mergers and Acquisitions

Leonidas Barbopoulos, Samer Adra, Elie Menassa

Research output: Working paper

Abstract

We show that the autonomy and expertise of boutique banks help acquirers enjoy significant gains from informationally demanding deals. Boutique banks add value to acquirers of large private companies in the short-run. Acquirers of small private companies also benefit from boutique banks, but these gains are only pronounced in the long-run. We attribute the delayed market response to the limited activity of information-driven traders at the time of the announcement of small private deals. We further show that resourceful acquirers recognize the valuable services offered by boutique banks and are more likely to involve them in private target deals. Lastly, we present novel evidence that boutique banks contribute to wealth creation in small public target M&As that are economically consequential for the acquirer. This result emerges only after we address endogeneity concerns by controlling for the acquirer’s quality.
Original languageEnglish
Pages1-42
Number of pages42
Publication statusIn preparation - 2020

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