Trends in Cross Border Mergers and Acquisitions
From The Location of Cross-Border Mergers & Acquisitions in the USA
The vast majority of foreign direct investment (FDI) takes place in the form of cross-border mergers and acquisitions (M&As), see Evenett (2004). Analyzing the determinants and consequences of M&As is part of a large and growing literature in both (international) economics and (international) business. In economics, the dominant industrial organization (IO) literature does, however, typically not deal with the cross-border aspect of M&As, but instead concentrates on national M&As (Salant et al., 1983; O’Brien and Shaffer, 2005; Davis and Wilson, 2008; Egger and Hahn, 2010). A relatively small literature explicitly tries to include the cross-border aspect of M&As, but neglects the role of country factors that are central in international economics and international business to explain the structure and variation of cross-border transactions (Anand and Delios, 2002; Nocke and Yeaple, 2007, 2008, Bertrand and Zitouna, 2006; Fugmagalli and Vasconcelos, 2009, Halverson, 2012). The impact of country wide differences on cross-border M&As is taken explicitly into account by Neary (2004, 2007) who focuses on differences in comparative advantage between countries in a general equilibrium model to explain the occurrence of cross-border M&As. Empirical support for this idea is found by Brakman et al (2013), see also Blonigen et al (2014). In the international business literature – ever since the introduction of Dunning’s Ownership-Location-Internalization (OLI) framework – the mode of foreign entry and the choice of a foreign location have been central, but not explicitly modelled, as the OLI framework is more a taxonomy of relevant elements for location choice than a model (see for example Dunning, 2000).2
Both for the modern international business and international economics literature, however, whenever the location of cross-border M&As is taken into account, it usually refers to the host country as a whole. Where to locate the M&A within the host country is not analyzed. This amounts to assuming that if foreign firms have decided to engage in an M&A they choose a country but are indifferent regarding the target location within that country. This observation is the starting point for the present paper. In contrast to this observation with respect to cross-border M&As, the within country location choice with respect to greenfield FDI has been analyzed in depth. The seminal study by Head et al. (1995) was pivotal, and initiated a large and growing body of literature; see for example Fontagne and Mayer (2005); Basile et al., (2008); Defever, (2006); or Mataloni, (2011). Similar analyses for cross-border M&As are largely absent and this is striking because the bulk of FDI is in the shape of cross-border M&As. A priori, there is no reason to assume that the location decision of greenfield investments and M&As are similar. M&As, by definition, merge with or acquire existing firms at a specific location, whereas greenfield investments can, in principle, locate anywhere.
From Economic and Financial Integration and the Rise of Cross-Border M&As
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
- Most of the Foreign Direct Investment (FDI) is in the form of Cross Border M&A.
The motivation for Cross Border M&A can be several:
- Horizontal Integration ( Seeking Market Share)
- Vertical Integration ( Control of Supply Chain)
- Diversification (Market Seeking)
Research indicate that most of the cross border M&A are for seeking markets.
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
- Cross Border Mergers have been rising since 1985.
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
- Europe and North America dominate regions in which cross borders M&A are taking place.
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS
From M&A Today: A Quick Pre-Financial Crisis Comparison
Sources of M&A Data:
From Exploration of Mergers and Acquisitions Database: Deals in Emerging Asian Markets
There are four popular mergers and acquisitions databases,
- SDC Platinum Mergers & Acquisitions (M&A) database,
- Bloomberg M&A database,
- Mergerstat M&A database,
- ZEPHYR M&A database.
The SDC Platinum M&A Database covers domestic deals from 1979 to present and international deals from 1985 to present. Thomson Reuters states that the SDC includes more transactions than any other source and is widely used by the industry professionals and academic researchers.
The Bloomberg M&A database began putting the mergers and acquisitions product together in January 1998, with the intention of providing “100 percent coverage of all global deals as they were announced” (Ide, 2001). Bloomberg states that it has mergers and acquisitions staff in 12 offices worldwide compiling M&A data and relationships with over 800 legal and financial firms.
According to the Zimmerman (2006), the Mergerstat database covers both acquisitions and divestitures where at least one significant party is a U.S. company.
the ZEPHYR database covers transactions both inside and outside the U.S. and is particularly useful to study M&A deals in Europe (from 1997 forward for European transactions; from 2000 forward for North American transactions; global coverage begins in 2003).
Academic Libraries
- University of Southern California
- http://libguides.usc.edu/mergers
- University of Chicago
- http://guides.lib.uchicago.edu/mergers
- Harvard University/Harvard Business School
- https://www.library.hbs.edu/Find/Databases/SDC-Platinum-Securities-Data-Company
- University of Pennsylvania/Wharton
- https://wrds-web.wharton.upenn.edu/wrds/news/index.cfm?display=read&news_id=601
Deloitte Consulting M&A Services
KPMG Consulting
Thomson Reuters
PITCHBOOK.COM
White and Case
IMAA-Institute.org
https://imaa-institute.org/mergers-and-acquisitions-statistics/
FACTSET / MERGERSTAT
https://www.factset.com/data/company_data/mergers_acq
Bureau Van Dijk/ZEPHYR
https://www.bvdinfo.com/bvd/media/reports/global-fy-2016.pdf
STATISTA
https://www.statista.com/topics/1146/mergers-and-acquisitions/
UNCTAD / World Investment Report
http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/World_Investment_Report.aspx
Wilmer and Hale Law Firm
Dealogic.com
http://www.dealogic.com/insight/ma-outlook-2017/
Please also see other related posts:
Mergers and Acquisitions – Long Term Trends and Waves
External Balance sheets of Nations
Low Interest Rates and International Investment Position of USA
Key sources of Research:
CROSS-BORDER MERGERS AND ACQUISITIONS:
ON REVEALED COMPARATIVE ADVANTAGE AND MERGER WAVES
Steven Brakman
Harry Garretsen
Charles van Marrewijk
2008
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1087886https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1087886
Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics
CESifo Working Paper Series No. 1823
Steven Brakman
Date Written: October 2006
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=940348
Cross-border Mergers and Acquisitions: Their Role in Industrial Globalisation
2000
Nam-Hoon Kang and Sara Johansson
Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future
Katsuhiko Shimizua,*, Michael A. Hittb,1, Deepa Vaidyanathc,2, Vincenzo Pisanod,3
Available online 24 July 2004
Determinants of Cross-Border Mergers and Acquisitions
Isil Erel / Rose C. Liao / Michael S. Weisbach
March 15, 2011
https://fisher.osu.edu/supplements/10/9864/ELW_JFRound3Revision.pdf
The Cross-Border Mergers and Acquisitions Wave of the Late 1990s
Simon J. Evenett
http://www.nber.org/chapters/c9545.pdf
The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments
Paula Neto; Antonio Brandão; António Cerqueira
2010
The Impact of FDI, Cross Border Mergers and Acquisitions and Greenfield Investments on Economic Growth
Paula Neto; Antonio Brandão; António Cerqueira
2010
Exploration of Mergers and Acquisitions Database: Deals in Emerging Asian Markets
http://www.myacme.org/ijmtp/IJMTPV14N1/3%20IJMTP14005%20Draft%203%20final.pdf
Cross Border Mergers and Acquisitions
Scott Whitaker
2016
Economic and Financial Integration and the Rise of Cross-Border M&As
STEVEN BRAKMAN
GUS GARITA
HARRY GARRETSEN
CHARLES VAN MARREWIJK
March 2009
The Location of Cross-Border Mergers & Acquisitions in the USA
Steven Brakman
Harry Garretsen
Charles Van Marrewijk
CESIFO WORKING PAPER NO. 5331
APRIL 2015
M&A Today: A Quick Pre-Financial Crisis Comparison
2017
Cross-Border Mergers and Acquisitions and Financial Development:
Evidence from Emerging Asia
Douglas H. Brooks and Juthathip Jongwanich
No. 249 | February 2011
https://www.adb.org/sites/default/files/publication/28703/economics-wp249.pdf
MERGERS AND ACQISITIONS (M&As)
Prepared by
Directorate for Financial and Enterprise Affairs, Investment Division, OECD
May 2004
https://www.imf.org/External/NP/sta/bop/pdf/diteg4a.pdf
OECD BENCHMARK DEFINITION OF FOREIGN DIRECT INVESTMENT:
FOURTH EDITION –
ISBN 978-92-64-04573-6 – © OECD 2008
https://www.oecd.org/daf/inv/investmentstatisticsandanalysis/40193734.pdf
Economic and Other Impacts of Foreign Corporate Takeovers in OECD Countries
https://www.oecd.org/daf/inv/investment-policy/40476100.pdf
A Comparative Analysis of the Economic Effects of Cross-Border Mergers and Acquisitions in European Countries
Anita Maček
https://cdn.intechopen.com/pdfs-wm/38482.pdf
Viewpoints which Matter 