Acquirers' selection criteria when choosing a mergers and acquisitions advisor bank in South Africa.

Abstract

ABSTRACT The research had three main objectives: firstly to establish if acquirers in Mergers and Acquisition (M&A) deals find value in M&A advising banks, secondly to determine what selection criteria acquirers use when deciding which advisor to select, and thirdly to determine some sort of ordering of these factors of the selection criteria of acquirers. The data for this research was collected using a survey questionnaire. The questions were informed by a review of the recent literature on the topic of M&As. The data was subjected to various statistical analysis techniques including ranking, averaging and factor analysis. The main finding of the research was that 90 per cent of acquirers still see value in using M&A advising banks on deals and find them especially useful where acquirers do not have access to the specialised intellectual capital that M&A advising banks have. The other important finding is that costs remain a key factor in explaining the selection process, but that costs, whether high or low, are not indicative of the quality acquirers perceive to get from advisors. Acquirers are looking to M&A advisors to show commitment to deals and deliver on their promises.