Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/147493
Title: ON THE CONCURRENT PROVISION OF LENDING AND M&A ADVISORY SERVICES
Authors: ONG JUN YU
Issue Date: 2009
Citation: ONG JUN YU (2009). ON THE CONCURRENT PROVISION OF LENDING AND M&A ADVISORY SERVICES. ScholarBank@NUS Repository.
Abstract: This paper examines whether there are benefits to firms when financial institutions concurrently provide lending and M&A advisory services. I find that there are no differences in the amount of M&A advisory fees paid on concurrent deals but firms pay significantly higher spreads of 40 to 42 bps on concurrent loans. This is consistent with economic theory that the bundling (concurrent provision) of products acts as a price discrimination device for sellers. Firm size, leverage and the requirement to post collateral are positively correlated with the likelihood of a firm concurrently borrowing from its M&A advisor. This can be attributed to the fact that firms that are large or financially constrained are less likely to be able to afford spending additional time during an acquisition to seek alternative sources of funding.
URI: http://scholarbank.nus.edu.sg/handle/10635/147493
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