Private Equity and cross boundary m&a

 Private Equity and cross border ma Article

Cross-Border Mergers and Acquisitions:

The Role of Private Value Firms

Tag Humphery-Jenner

University of New Southern Wales

Zacharias Sautner

School of Amsterdam

Duisenberg University of Fund

Jo-Ann Suchard

University of New South Wales

This draft: July 2012


We all study the role of personal equity companies in cross-border mergers and acquisitions. We find that non-public equity-backed firms are more likely to become targets in crossborder M& A orders. This impact is particularly strong in transactions where the concentrate on or its shareholders definitely reach out pertaining to an acquirer. On average, cross-border deals with private equity-involvement are generally not associated with bigger acquirer announcement returns. However , announcement earnings are larger if the acquirer is supported by a private equity firm and the target is from a rustic with poor corporate governance. We provide proof indicating that the international systems and contacts that result from prior cross-border deals and their access to knowledgeable financial advisors can describe why private equity finance firms create value in such bargains. Our findings suggest that private equity finance firms will help you to reduce data asymmetries in a few cross-border M& A discounts. We conduct several checks to address conceivable endogeneity concerns.

JEL Code: G34, G32, G24

Keywords: Mergers and acquisitions, private equity, information asymmetries


Info: Mark Humphery-Jenner, School of Banking and Finance, Australian School of Business, University or college of New Southern region Wales, Sydney, Australia; email: m. [email protected] edu. au; Zacharias Sautner: Finance Group, Amsterdam Organization School, University of Amsterdam, Amsterdam, The Netherlands and Duisenberg School of Finance, Amsterdam, The Netherlands; email: z. [email protected] nl; Jo-Ann Suchard: Institution of Banking and Finance, Australian University of Organization, University of New South Wales, Sydney, Quotes; email: l. [email protected] edu. au. We would like to thank Dirk Kacau, Isil Erel, David Feldman, Chris Florackis, Lixiong Guo, Russell Jame, Adrian Lee, Michelle Lowry, Jens Martin, Ronald Masulis, Joseph McCahery, Marco Navone, Pascal Nguyen, Ludovic Phalippou, Ronan Powell, Konark Saxena, Kar Mei Tang, and Jason Zein for very helpful comments. We all also benefited from responses received in the seminar series at School of Gatwick, University of New South Wales, and College or university of Technology Sydney. Every errors happen to be our own. Comments are very pleasant.


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Cross-Border Mergers and Acquisitions:

The Role of Private Equity Businesses


We study the role of personal equity businesses in cross-border mergers and acquisitions. We discover that private equity-backed companies are more likely to turn into targets in crossborder M& A ventures. This result is particularly strong in deals where the goal or it is shareholders definitely reach out to get an acquirer. On average, cross-border deals with exclusive equity-involvement are not associated with higher acquirer announcement returns. Yet , announcement earnings are higher if the acquirer is supported by a private collateral firm as well as the target can be from a country with poor corporate governance. We provide data indicating that the international networks and contacts that result from prior cross-border deals and their access to knowledgeable financial advisors can explain why private equity firms make value in such offers. Our conclusions suggest that private equity finance firms can help to reduce info asymmetries in a few cross-border M& A deals. We perform several tests to address likely endogeneity issues.


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