We examine how an M&A advisor’s position in the network of investment banks affects its ability to create value for acquirers in takeover transactions. We show that acquirers enlisting the services of more centrally positioned M&A advisors enjoy higher announcement abnormal returns and pay lower takeover premiums. Consistent with the idea that central network positions convey an information advantage, we find that the effects are stronger for acquirers facing greater target information asymmetry and for M&A advisors depending more on networks for target-specific information. The information advantage primarily comes from network contacts that had previously assisted the targets in equity issuance. Centrally positioned advisors charge premium fees; network banks appear to enjoy a significant advantage in the competition for future co-advisory appointments.

Increases in government debt are associated with a reduction in the yield spread between high-grade corporate bonds and long-term Treasuries and an increase in fiscal uncertainty. Consequently, increases in government debt significantly reduce the firm’s likelihood of acquisition. The effect is stronger among firms whose debt is a closer substitute for Treasuries and firms with greater exposure to fiscal uncertainty. A positive change in government debt motivates acquirers to avoid cash financing or more irreversible deals. The average deal quality is lower during periods of rising public debt, consistent with heightened fiscal uncertainty impeding monitoring and fostering “bad” deals.

We extract information about future economic conditions from firms’ cross-border merger and acquisition announcements, and show it predicts changes in relative economic growth rates and foreign exchange rate returns. We find the predictability is driven by the acquisition decisions of domestic firms, which signal turning points in local economic growth. The findings are motivated by a simple model of exchange rate determination with heterogeneous expectations and support the theorized relationship between foreign exchange rates and macroeconomic fundamentals. The results provide new tools for policy makers seeking to predict economic activity and offer global investors a novel source of portfolio diversification.

Firm fixed effects alone explain as much of the variation in acquirer returns as all the firm- and deal-specific characteristics combined. An interquartile range of acquirer fixed effects is over 6%, comparable to the interquartile range of acquirer returns. Acquirer returns persist over time, but mainly at the top end of the distribution. Persistence continues under different chief executive officers (CEOs), and attributes of the broader management team do not explain the fixed effect. Firm-specific heterogeneity in acquirer returns suggests that some organizations are extraordinary acquirers irrespective of the leadership at the top and the deal structures they choose. Implications for the M&A research are discussed.

This paper examines the value-added role of industry specialist advisors in M&As. We find that compared to non-industry specialists, advisors specializing in the target industry help acquirers garner higher announcement returns. However, there is no significant difference in acquirer returns between advisors specializing in the acquirer industry and non-industry specialists. The choice of a specialist advisor in the target industry benefits acquirers most when there is significant information asymmetry surrounding the targets. Moreover, the bulk of value creation comes from small- to medium-sized financial advisors, rather than large, top-tier investment banks. Finally, our results suggest that advisors specializing in the target industry add value mainly through their ability to help acquirers purchase targets at a lower price.