M&A Deals

Cross Border M&A

The world is getting smaller, at least from an M&A perspective! Increased competition and globalization in almost all industries has fostered in an era of friendly M&A deals without borders. Strategic buyers have been the primary source of M&A transactions in recent years as many firms look to remain competitive in an increasingly global landscape. Most of the time, M&A deals are completed for either offensive or defensive reasons. And, post-recession, the companies with cash have wanted to deploy it quickly and efficiently. Most of the time, the best way for a company to invest is by buying another company. In the “old” days, a company would create a strategy and business plan to expand their business. This would include acquiring or building new plant and equipment. In today’s environment, that takes too long and is too risky for most companies. Therefore, buying another business is a faster, more direct, and less risky approach to expanding a business.

As technology continues to make communication throughout the world easier, companies have not hesitated to do transactions in other countries and continents. These cross-border deals have further fueled M&A in recent years. Acquisitions provide the buying company with an opportunity to expand their global reach in order to generate new sources of revenue, acquire new technology or products, etc.
It is important to note that unlike the M&A deals of the 1980’s, the transactions taking place today are much more friendly in nature as strategic buyers look for target firms that can complement their core competencies.
The role of investment banks in M&A transactions has also evolved with the motivation of buyers and sellers. Today, more than ever, investment banks are required to be global in their reach. Investment banks that fail to offer cross border services are proving to be less valuable to strategic buyers who are looking to expand their businesses across the globe. It’s imperative to work with a firm with many years of cross border M&A experience as there are many nuances and cultural factors that play into closing a successful transaction. This is true whether it’s hiring an investment bank on the buy-side or the sell side.