Title: Consultants as the players, bankers as the house: gaining competitive advantage in merger and acquisition advisory services

Authors: Richard B. Connell, Tatiana Zalan, Jack Cadeaux

Addresses: University of New South Wales at the Australian Defence Force Academy, Canberra, ACT 2600, Australia. ' International Graduate School of Business, University of South Australia, City West Campus, Way Lee Building, North Terrace, Adelaide 5001, Australia. ' University of New South Wales, Kensington, Quadrangle Building, Level 3, Kensington, New South Wales, Australia

Abstract: The unprecedented worldwide growth in the aggregate transaction value of mergers and acquisitions (M&A) has been accompanied by a concomitant increase in the advisory fees. Management consultants have challenged the status of banks in the latter|s largely exclusive domain of M&A advisory services. Based on an in-depth inquiry into M&A decisions made by 27 medium and large-sized companies in Europe, the USA and Asia-Pacific, we investigate the decision-making processes used by bankers and consultants to undertake M&A advisory work. From the point of view of the financial services provider, we highlight the areas where banks have or can gain competitive advantage over consultants through the pricing mechanism, based either on contingency, fixed fees or a combination of both. We conclude that consultants may win from accepting M&A work in the short term but the long-term odds favour the banks.

Keywords: advisory fees; consulting; decision making process; financial services; mergers and acquisitions; M&A advice.

DOI: 10.1504/IJFSM.2008.022554

International Journal of Financial Services Management, 2008 Vol.3 No.3/4, pp.295 - 309

Published online: 14 Jan 2009 *

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