How does the presence of financial constraints influence which firms become acquirers, and average ownership structures and divestiture rates of acquisitions? To address these questions, we develop a tractable model of M&As in financially underdeveloped markets where acquirers and targets emerge endogenously due to heterogeneity in liquidity across rms. We then show that selection based on financial conditions may have aggregate effects, leading to a greater likelihood of controlling stakes and higher post-acquisition survival rates, on average, in response to large negative financial shocks. Using banking crises as exogenous negative shocks to local financial markets, we present evidence consistent with the main predictions of the model in a dataset of domestic and cross-border M&As from emerging market economies. Domestic firms in the crisis-hit country acquire 12% more owner- ship and are 15% more likely to take majority stakes than their foreign counterparts.