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Cross-border acquisitions and restructuring: multinational enterprises versus private equity-firms

"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...

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Bibliographic Details
Main Authors: Research Institute of Industrial Economics, Stokholm, Baziki, Selva, Norbäck, Pehr-Johan, Persson, Lars, Tåg, Joacim
Institution:ETUI-European Trade Union Institute
Format: TEXT
Language:English
Published: Stockholm 2015
IFN
Subjects:
enterprise takeover
enterprise restructuring
multinational enterprise
private investment
Online Access:https://www.labourline.org/KENTIKA-19114345124919325279-Cross-border-acquisitions-and-.htm
Description
Summary:"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."
Physical Description:29 p.
Digital

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