Cultural Determinants of M&A Returns: How Fairness Opinions by Boutique Firms Affect Value

In recent years, an increasing amount of attention has been drawn to boutique investment banks as they climb industry league tables. I examine the difference between boutique and full- service firms, and whether cultural distinctions can be seen through the transactions they advise on. I use announcement period returns to determine the effect of differences in an acquirer’s investment bank on transaction returns. First, I find that transactions that have at least one boutique as a buy-side advisor have 2.8% higher returns than transactions entirely run by full-service banks. Second, I demonstrate the contradictory negative impact that a boutique has as a provider of buy- side fairness opinions. I interpret this to mean that both with and without providing a fairness opinion, boutiques are perceived to act differently than full-service firms, and often act as a check against potential conflicts of interest.

Global Commerce Scholar