Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms

Mark Humphery-Jenner, Zacharias Sautner and Jo-Ann Suchard
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Zacharias Sautner: University of Amsterdam, Duisenberg school of finance
Jo-Ann Suchard: University of New South Wales

Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We study the role of private equity firms in cross-border mergers and acquisitions. We find that private equity-owned firms are more likely to become targets in crossborderM&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively reach out for an acquirer. On average, cross-borderdeals with private equity-involvement are not associated with higher announcement returns. However, announcement returns are higher if the acquirer is owned by a private equity firm and the target is from a country with poor corporate governance. We provide evidence indicating that the international networks and connections that result from prior cross-border deals can explain why private equity firms create value in such deals. Our findings suggest that private equity firms can help to reduce information asymmetries in certain cross-border M&A deals. We perform several tests to address possible endogeneity concerns.

Keywords: Mergers and acquisitions; private equity; information asymmetries (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 (search for similar items in EconPapers)
Date: 2012-03-29
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Related works:
Journal Article: Cross-border mergers and acquisitions: The role of private equity firms (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20120031

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