Cross-Border Acquisitions and Restructuring: Multinational Enterprises versus Private Equity-Firms

Arbeitspapier

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. MNEs' advantage lies in firm-specific synergies and retained earnings, whereas PE-firms are good at reorganizing target firms. Prevailing interest rates do not work in favor of PE-firms, but a lower risk premium and a better financial market development does. Stronger firm-specific synergies, however, favors MNEs. Performing a welfare analysis, we show that a policy of restricting PE-firms from buying domestic assets can be counterproductive.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1057

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Economic Impacts of Globalization: Finance ; Oligopoly and Other Imperfect Markets
• Subject: Cross-border ; International Restructuring ; Ownership Efficiency ; Private Equity ; M&As

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baziki, Selva ; Norbäck, Pehr-Johan ; Persson, Lars ; Tåg, Joacim
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/109086
• Last update: 10.03.2025, 11:44 AM CET