How Much Do Various Advisers Affect the Success of M&A?

Companies that engage in M&A regularly employ a variety of financial, legal, and other advisers to enhance the chances of success for a deal. Though research has extensively examined the impact of financial advisers, and particularly investment bankers, on a deal’s outcome, the influence of strategy advisers such as management consulting firms (and legal advisers) has rarely been studied. Overall, based on a global questionnaire of over 100 M&A professionals, we find that strategy consultants contribute significantly to the perceived M&A success of firms.


Between December 19, 2019 and February 28, 2020, companies worldwide were surveyed regarding their M&A activity and M&A success. Specifically, the survey asked what type of advisers were hired to support surveyed firm’s M&A transactions, and how frequently they were employed. The survey also asked whether the respective advisers were hired only sometimes, such as when transactions were perceived as particularly complex, always, or never?

Our detailed questionnaire also addressed key company characteristics that influence the employment of advisers. These include, for example, how many in-house M&A experts work permanently at the company and how the company’s own M&A activities are organized internally (e.g., own M&A department at the headquarters, multiple departments, or experts at the business unit level). Finally, survey participant demographics, such as the age, the position within the organization, and their own M&A experience were taken into account when calculating the effects.

The study’s sample includes answers of 117 firms and their M&A executives. This sample size is comparable to other survey studies in this area (Trichterborn et al. (2016) have responses from 124 firms; Aktas et al. (2020) use data from 65 firms; Bodnar et al. (2019) base their analyses on 67 to 342 observations, and Jagannathan et al. (2016) utilize survey data from 127 firms).

Turning to our sample, it includes 57 percent large firms (i.e., firms with 2018 revenues of more than $1 billion) with little regional variation but significant variation in firms’ listing status. As expected, most listed companies are large (71 percent), while significantly fewer private companies are large (36 percent). As to number of employees and firm age, a similar pattern is observed. Only 51 percent of our sample is publicly traded. Thus, we have a balanced sample of private and listed firms, allowing us to draw conclusions about the overall M&A landscape and avoiding the typical bias towards listed firms in M&A research (Netter et al., 2011).

Research Question and Method

In addition to our main question of whether strategy advisers in particular are positively associated with M&A deal success, we also explore M&A process standardization as a potential way that advisers indirectly achieve an increase in M&A success for their clients.

Based on an extensive literature review, we hypothesize that M&A advisers use their extensive knowledge to standardize the complex M&A process for firms, and that this standardized approach significantly contributes to increasing M&A success. While we used the same questionnaire to establish in a companion paper (see Schmitz/Sievers (2021)) the importance of standardizing the M&A process, the results show that strategy consultants in particular are positively associated with success.

While our econometric approach allows division of the overall effect into direct and indirect effects of advisers on perceived M&A success, the following focuses on the total effects only.

Three Core Results

First, in complex acquisitions, using M&A advisers is generally associated with a negative impact on M&A success. This conclusion holds true across all considered cases, although the impact varies from -5.3 percent (lawyers, tax experts, and auditors) to a modest -0.7 percent (strategy consultants). This finding is in line with prior research by Servaes and Zenner (1996), who argue that M&A advisers can improve M&A success but fail to do so in some acquisitions having certain characteristics such as complexity.

Second, when employed sometimes or always, M&A advisers increase M&A success by 0.4 percent to 3.7 percent. In addition, hiring M&A advisers for every acquisition enhances M&A success more than does relying on them for some deals. These findings are consistent with the idea of  process benefits from M&A advisers, such as reduced process costs, improved target identification, and better negotiation  (e.g., Bowers and Miller, 1990; Golubov et al., 2012; Loyeung, 2018).

Finally, and most important, strategy consultants provide the greatest increase in M&A success across all considered M&A advisers. Specifically, they increase M&A success by up to 3.7 percent, which exceeds the benefits from financial advisers by more than one percentage point.

Although the relative percentages seem small, these figures become significant in multi-million and billion dollar transactions. Given that no other research has yet investigated strategy consultants in their role as M&A advisers (Gordon et al., 2019), we hope that future studies explore this matter in more detail.

This post comes to us from Alexander Schmitz, a doctoral candidate, and Soenke Sievers, a professor, at Paderborn University, Germany. It is based on their recent paper, “What are the effects of strategy consultants, financial, and legal M&A advisors on M&A success?” available here

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