Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms

40 Pages Posted: 25 Feb 2012 Last revised: 19 Sep 2016

See all articles by Mark Humphery-Jenner

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

Zacharias Sautner

Frankfurt School of Finance & Management; European Corporate Governance Institute (ECGI)

Jo-Ann Suchard

UNSW Business School; Financial Research Network (FIRN)

Date Written: July 17, 2016

Abstract

We show that it is a signal of deal quality in cross-border M&A if acquirers have private equity firms as owners (‘PE backing’). As such, announcements of cross-border M&A deals by PE-backed acquirers are associated with positive stock price reactions, 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 close by documenting that the market correctly anticipates that operating performance of PE-backed acquirers increases as a result of cross-border M&A.

Keywords: Mergers and acquisitions, private equity, information asymmetries

JEL Classification: G34, G32, G24

Suggested Citation

Humphery-Jenner, Mark and Sautner, Zacharias and Suchard, Jo-Ann, Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms (July 17, 2016). Strategic Management Journal, Forthcoming, 25th Australasian Finance and Banking Conference 2012, 2013 Financial Markets & Corporate Governance Conference, UNSW Australian School of Business Research Paper No. 2012 BFIN 10, Available at SSRN: https://ssrn.com/abstract=2010453 or http://dx.doi.org/10.2139/ssrn.2010453

Mark Humphery-Jenner

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Zacharias Sautner (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Jo-Ann Suchard

UNSW Business School ( email )

high street
High St
sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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