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Cross‐border mergers and acquisitions: The role of private equity firms


Humphery‐Jenner, Mark; Sautner, Zacharias; Suchard, Jo‐Ann (2017). Cross‐border mergers and acquisitions: The role of private equity firms. Strategic Management Journal, 38(8):1688-1700.

Abstract

We show that private equity ownership (“PE backing”) of the acquirer is a signal of deal quality in cross-border takeovers. As such, PE-backed acquirers experience higher announcement returns in cross-border takeovers, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms' experience and networks that result from prior deals in target countries. We document that the market correctly anticipates that operating performance of PE-backed acquirers increases as a result of cross-border mergers and acquisitions (M&A).

Abstract

We show that private equity ownership (“PE backing”) of the acquirer is a signal of deal quality in cross-border takeovers. As such, PE-backed acquirers experience higher announcement returns in cross-border takeovers, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms' experience and networks that result from prior deals in target countries. We document that the market correctly anticipates that operating performance of PE-backed acquirers increases as a result of cross-border mergers and acquisitions (M&A).

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48 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > Strategy and Management
Uncontrolled Keywords:Strategy and Management, Business and International Management
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 August 2017
Deposited On:10 Jul 2023 12:48
Last Modified:29 Jun 2024 01:37
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0143-2095
OA Status:Green
Publisher DOI:https://doi.org/10.1002/smj.2623
Related URLs: (Organisation)
Other Identification Number:merlin-id:23860
  • Content: Accepted Version
  • Language: English