We examine the contribution of credit ratings in the information set that bidders use to price targets. Using a sample that includes U.S. domestic deals completed between 1986 and 2012, we find that the presence of ratings significantly affects the M&A premiums paid in mergers and acquisitions (M&As). M&A premiums paid are lower in deals involving rated as opposed to nonrated firms. Assuming that the presence of ratings mitigates the problem of information asymmetry and allows bidders to pay a fair price for a target, then the post-M&A performance of bidders of rated targets would be superior. Indeed, we find that the presence of ratings and bidders’ post-M&A operating performance are positively related.