The effects of engaging financial advisers in Malaysian mergers and Acquisitions (M&As) / Erimalida Yazi

Literature in the field of M&A shows that acquirers did not gain from the transaction and the successful rate of takeovers was quite low at about 40% in the 1970s and about 60% in the 1990s. So, this study aims to investigate the effects of engaging financial advisers in merger and acquisition (M&A) transactions. It measures whether different tiers of financial advisers with different expertise, experience and information bring different outcome towards their clients' finns in terms of speed, successful rate and wealth effect. Commonly, the choice of financial advisers to provide M&A advice was essentially determined by their perceived quality or reputation. The determination of the adviser quality was based on the annual adviser league table according to the market share of the advisers for the twelve-month period. Flexible ranking method was used in order to differentiate the quality of advisers. Using flexible ranking method, the financial advisers are ranked every year based on the market share in that particular year. First tier advisers are ranked by 1/3 of the highest market share. Second tier advisers who control another 1/3 of the market share. The rest are third tier advisers. Three models are highlighted in order to determine the effect of engaging financial advisers. Logistic regression was carried out to predict the successful or unsuccessful deals. For speed of completion and abnormal returns, multiple regression analysis was conducted to see the effect of engaging financial advisers.