حق کسب در زمانی که بانک های سرمایه گذاری پول خود را در معاملاتی که آنها توصیه می کنند سرمایه گذاری می کنند و زمانی که آنها نباید این کار را انجام دهند: شواهد حاصل از جمع آوری دارایی در UK

This paper shows that investment banks that advise acquirers of assets negotiate favourable terms when they invest their own money in the deal, but lead their clients to overpay when they do not have financial incentives. Acquirers pay the smallest premiums in divisional MBOs when advised by the investment bank that finances the deal, and the largest premiums in interfirm asset sales when advised by an investment bank remunerated contingent on deal completion. Premiums are in between the two extremes when acquirers do not use advisors. These results are attributed to investment bank incentives, which exacerbate the information asymmetry between buyers and sellers of assets.

Recent research has questioned whether the incentives implicit in the compensation of investment banks advising acquirers in mergers and acquisitions lead to better deals for their clients. For example, McLaughlin (1990) documents that financial advisors whose compensation consists, at least partly, of contingent fee payments (paid only if the deal is completed), have incentives to complete deals at any price, even if their advice leads clients to overpay. The literature has examined investment banks only when they are remunerated with contingent fee compensation and their incentives are not aligned with the acquirer’s interests (McLaughlin, 1990 and McLaughlin, 1992; Rau, 2000). In contrast, this paper examines investment bank behaviour when their incentives are very closely aligned with the acquirer’s interests. More specifically, it compares the premiums paid for acquisitions of assets under three different scenarios: when the acquirers are advised by investment banks that also finance the deal; when they are advised by investment banks that do not provide financing; and when the acquirers do not use financial advisors. The paper uses the provision of financing by the advising investment bank as the criterion for evaluating its incentives during the acquisition negotiations. Investment banks that invest in the deal have strong incentives to negotiate favourable terms in order to safeguard their investment. Unit management buyouts (divisional MBOs) and interfirm asset sales are appropriate transactions for this direct comparison. Investment banks that advise MBO acquirers often participate in financing the deal. The combination of a management team with inside information about the acquired division working with an investment bank that invests its own money in the deal increases the likelihood that the assets can be acquired at a low price. In contrast, in interfirm asset sales, the combination of an investment bank with incentives to complete the deal at any price (subject to contingency fee compensation) working with an acquirer who has an information disadvantage vis-à-vis the seller, can lead to the acquirer paying higher premiums for the acquisition of the assets. The paper uses a sample of 600 sell-offs (91 unit management buyouts and 509 interfirm asset sales) undertaken by UK selling firms during the period 1984–1994. The findings show that in divisional MBOs, acquirers who use financial advisors pay lower acquisition premiums compared to acquirers who do not use advisors.1 However, these low premiums are observed only in transactions in which the advisors participate in financing the deal. In contrast, in interfirm asset sales acquirers who use advisors pay higher premiums compared to acquirers who do not use advisors. When all acquirers use advisors, the average premium in divisional MBOs is significantly smaller compared to interfirm asset sales. Any differences in the sample are driven exclusively by deals whose acquirers use advisors. There are no significant differences between deals whose acquirers are not advised by investment banks. The results are robust in cross-sectional regressions of premiums and seller abnormal returns using a number of controls and two different proxies for the premium. The results also hold if we keep the identity of the advisor constant and compare premiums when the latter advises on MBOs and interfirm asset sales. The main insight that emerges from this analysis is that in contrast to what has been suggested by earlier work, the use of financial advisors can help acquirers negotiate favourable terms in acquisitions. However, this appears to be the case only when the investment banks invest their own money in the deals they advise. Otherwise, acquirers are likely to overpay when using advisors. The paper is organised as follows. The next section outlines the research hypotheses. Section 3 discusses the research methodology and Section 4 describes the data. Section 5 presents the empirical analysis of selling firm abnormal returns. Section 6 analyses the selling premiums. Section 7 concludes.

Thispaperexaminesthepremiumspaidbyacquirers,andtheroleofinvestment banksintheacquisitionsofassetsincasesinwhichthefinancialadvisorsfacecon- flictsofinterestandincaseswheretheydonot.Itusesdataon91unitmanagement buyoutsand509interfirmassetsalesbyUKsellingfirmsfortheperiod1984–1994. Unlike previous studies, which focus on contingent fee compensation, the current paperusestheprovisionoffinancingbytheadvisinginvestmentbankasthecriterion forevaluatingitsincentivesduringtheacquisitionnegotiations.Itcomparesdirectly thepremiumspaidbyacquirersunderthreedifferentscenarios:whentheydonotuse the services of an investment bank; when they use advisors who invest their own money inthedeal;andwhentheyuseadvisorswhoarecompensatedbasedonthe completionofthedeal. TheempiricalresultsindicatethatinunitMBOs,theacquiringmanagementteams paythelowestpremiumswhentheyuseinvestmentbankswhofinancethetransac- tion.Thesetransactionsbringtogetheranacquirerwithinsideinformationaboutthe division to be acquired and an investment bank that invests its own money in the deal.Ontheotherhand,ininterfirmassetsales,acquirerswhoemployfinancialad- visors pay the largest premiums. These deals combine an acquirer without inside knowledge of the target division with an investment bank whose contingency fee compensation provides an incentive to complete the deal at any price, even if the buyeroverpays.Theseempiricalresultsarerobustincross-sectionalregressionsthat controlforseveralfactorsthathavebeenshowntoaffectthesellingpremium. Thisevidenceaddstoagrowingbodyofliteraturethatquestionstheincentivesof investmentbankstonegotiatefavourabledealsfortheirclientsinacquisitions.The maininsightfromthisanalysisisthatfinancialadvisorshelpacquirersnegotiatefa- vourabletermswhentheyinvesttheirownmoneyinthedeal.Otherwise,acquirers are likely to overpay when using investment banks as advisors in acquisitions of assets.