Why is there so much cross-border M&A
The trend of increasing cross border M&A has accelerated with the globalization of the world economy.
Growing interdependence and the entrance of foreign players as cross-border M&A causes
The growing interdependence between worldwide economies has increased corporate transactions between countries. Companies need to acquire enough critical mass to be able to compete against global players.
The entrance of larger, competitive foreign players shrink margins and at the same time force local companies to spend more to keep up with their research, development and innovation capacities. To survive, many companies are forced to merge in order to reduce cost or gain enough market share to create economies of scale.
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Having to deal with foreign companies that are more competitive in terms of cost, size, research capacity, development or innovation, means that many companies need to look for ways to reduce costs via productive synergies with similar companies or obtain a sufficient market share in order to produce economies of scale.
Cross-border M&A and sell-side operations
The good news for sellers is that strategic acquirer are willing to pay a premium in a cross border transaction. Also, in a cross border deal, the buyer is usually willing to respect the management team of the target company.
When analyzing who might be the best buyer for your company, the key is discovering which company is the one that can obtain the most value by acquiring your company and, as such, can share more of this value with you by paying the most.
Remember that the best buyers aren’t looking for you. You are the one who needs to find them and woo them.
A big percentage of the success of a sell side operation depends on the search of the best potential buyers worldwide and reaching out to the key people in those organizations, always with confidentiality throughout the entire process.
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This article was written by Enrique Quemada, ONEtoONE President.