Seminar by Mark Humphery-Jenner
- Topic: Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms
- Speaker: Mark Humphery-Jenner, Lecturer, Australian School of Business, University of New South Wales
- When: 12th October, 2012, (Fri)
We study the role of private equity firms in cross-border mergers and acquisitions. We find that private equity-backed firms are more likely to become targets in cross-border M&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively reach out for an acquirer. On average, cross-border deals with private equity-involvement are not associated with higher acquirer announcement returns. However, announcement returns are higher if the acquirer is backed 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 and their access to experienced financial advisors 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.
View the full paper on SSRN