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Personal connections, financial advisors and M&A outcomes

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  • Dobrina Jandik
  • Tomas Jandik
  • Weineng Xu

Abstract

Personal connections (based on prior employment, educational, or social club membership overlaps) between top executives and board members of the bidding firm and those of the bidder financial advisor affect Mergers and Acquisition (M&A) outcomes. M&A deals where bidder top managers share past personal work‐related connections with their advisors are associated with 1.7% lower bidder announcement returns compared to the returns for deals without such connections. We also show M&A deals advised by personally connected financial advisors are more likely to be completed but take longer to get finalized. Last, when connections exist, the bidder CEO receives a higher cash bonus upon completion of the deal, and the financial advisors are rewarded by higher advisor fees. Overall, our findings suggest that personal connections between bidders and their financial advisors could be detrimental.

Suggested Citation

  • Dobrina Jandik & Tomas Jandik & Weineng Xu, 2025. "Personal connections, financial advisors and M&A outcomes," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 48(2), pages 605-643, June.
    • Handle: RePEc:bla:jfnres:v:48:y:2025:i:2:p:605-643
    DOI: 10.1111/jfir.12422
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