Competition in the Market for Takeover Advisers

We investigate factors that motivate bidders to engage advisers, we model adviser selection and we test whether value-adding advisers gain market share. Our sample includes 801 attempted takeovers over 1989–1998 in Australia. Our results indicate advisers are likely to be engaged if the takeover deal is large, hostile, and includes non-cash compensation. We find deal completion is not as closely correlated with adviser rankings as does Rau (2000) but we confirm his finding that adviser ranked high on market value of deals advised do not have a comparative advantage in adding value to firms. However, we document some (limited) evidence that value-adding advisers achieve an increase in subsequent deal flow. Our results are consistent with specialization among takeover advisers.