Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109086
Authors: 
Baziki, Selva
Norbäck, Pehr-Johan
Persson, Lars
Tåg, Joacim
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper 1057
Abstract: 
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.
Subjects: 
Cross-border
International Restructuring
Ownership Efficiency
Private Equity
M&As
JEL: 
F23
F65
L13
Document Type: 
Working Paper

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