Overcoming Long Distances with Syndication: The Case of Private Equity Cross-Border Deals

AbstractUsing a dataset of 1149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples narrows when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs.

Download Full-text

Cross-Border LBOs, Human Capital, and Proximity: Value Addition through Monitoring in Private Equity Investments

Journal of Financial and Quantitative Analysis ◽

10.1017/s002210902000006x ◽

2020 ◽

pp. 1-41

Author(s):

Thomas J. Chemmanur ◽

Tyler J. Hull ◽

Karthik Krishnan

Keyword(s):

United States ◽

Human Capital ◽

Initial Public Offering ◽

Private Equity ◽

The United States ◽

Efficient Allocation ◽

Value Addition ◽

Cross Border ◽

Target Firms ◽

Public Offering

We show that cross-border leveraged buyout investments involving U.S. rather than non-U.S. private equity (PE) investors are more likely to have a successful exit (initial public offering or acquisition). Exogenous increases in effective proximity following the signing of “open sky agreements” between the United States and target firms’ home countries increases both the propensity of U.S. PE firms to invest in these firms and the value addition by these investors. We show that such increases in value addition by U.S. PE investors following proximity increases are at least partially due to better monitoring, facilitated by the more efficient allocation of experienced U.S. PE managers to cross-border deals.

Download Full-text

Cross-border acquisitions and restructuring: Multinational enterprises and private equity-firms

European Economic Review ◽

10.1016/j.euroecorev.2017.02.012 ◽

2017 ◽

Vol 94 ◽

pp. 166-184 ◽

Cited By ~ 10

Author(s):

Selva Bahar Baziki ◽

Pehr-Johan Norbäck ◽

Lars Persson ◽

Joacim Tåg

Keyword(s):

Multinational Enterprises ◽

Private Equity ◽

Cross Border

Download Full-text

The Benefit of Cross-Border Investments in the Chinese Emerging Venture Capital and Private Equity Market

Finance ◽

10.3917/fina.pr.0001 ◽

2021 ◽

Vol Prépublication (0) ◽

pp. I-XXXIV

Author(s):

Fabio Bertoni ◽

Alexander Peter Groh

Keyword(s):

Venture Capital ◽

Private Equity ◽

Equity Market ◽

Cross Border

Download Full-text

Private equity funds and cross-border acquisitions

International Investments in Private Equity ◽

10.1016/b978-0-12-375082-2.10007-2 ◽

2011 ◽

pp. 139-158

Author(s):

Peter Cornelius

Keyword(s):

Private Equity ◽

Cross Border ◽

Equity Funds ◽

Private Equity Funds

Download Full-text

Integrate to Achieve Accelerated Synergy Capture

Winning at the Acquisition Game ◽

10.1093/oso/9780198858560.003.0008 ◽

2020 ◽

pp. 113-129

Author(s):

Timothy Galpin

Keyword(s):

Best Practices ◽

Private Equity ◽

Cross Border ◽

Integration Management ◽

Post Merger Integration ◽

Merger Integration

A study of 1,000 corporate and private equity executives found that post-deal integration was the number one factor in realizing deal success. While the term “post-merger integration” (PMI) is commonly used, it is very much a misnomer, as PMI should begin early in the deal process, prior to deal close. This chapter covers three main PMI phases, ten key PMI work streams, agile integration management, and how to accelerate synergy capture during integration. The tools, templates, best practices, potential pitfalls, and a case example of how to conduct effective M&A integration are also addressed, along with the main participants, core activities, buyer’s and seller’s perspectives, and key cross-border considerations.

Download Full-text