Cross-border acquisitions and restructuring: Multinational enterprises and private equity-firms

Selva Bahar Baziki, Pehr Johan Norbäck, Lars Persson*, Joacim Tåg

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

8 Citations (Scopus)

Abstract

An increasingly large share of cross-border acquisitions are undertaken by private equity-firms (PE-firms) and not by traditional multinational enterprises (MNEs). We propose a model of cross-border acquisitions in which MNEs and PE-firms compete over domestic assets and which incorporates endogenous financial frictions. MNEs’ advantages lie in firm-specific synergies and access to internal capital markets, whereas PE-firms are good at reorganizing target firms. We show that stronger firm-specific synergies, lower restructuring advantages for PE-firms, higher exit costs for PE-firms, better access to internal capital markets, a higher risk premium on lending, higher moral hazard problems, and higher trade costs all favor MNEs over PE-firms. We also present cross-country correlations that are consistent with these predictions.

Original languageEnglish
Peer-reviewed scientific journalEuropean Economic Review
Volume94
Pages (from-to)166-184
Number of pages19
ISSN0014-2921
DOIs
Publication statusPublished - 01.05.2017
Externally publishedYes
MoE publication typeA1 Journal article - refereed

Keywords

  • Cross-border acquisitions
  • Institutions
  • M&As
  • Private equity
  • Trade

Fingerprint

Dive into the research topics of 'Cross-border acquisitions and restructuring: Multinational enterprises and private equity-firms'. Together they form a unique fingerprint.

Cite this