The Role of Investment Banks in M&A Transactions  Fees and Services

Abstract
We examine the pricing and performance of advisers in M&A transactions. We determine
adviser quality on the basis of a contemporaneous market share measure and show that high
quality advisers receive higher M&A advisory fees. High quality advisers also complete deals
faster, but their superiority is not reflected in increasing the likelihood of deal completion or
delivering greater abnormal equity returns to their clients. It is well known that stock bids are
received more negatively than cash bids, so we further partition the sample of acquirers by
consideration type and examine the abnormal returns of each partition. We find that high quality
investment banks are able to differentiate themselves by delivering greater abnormal returns to
their acquirer clients in deals involving stock.