Year of Graduation
Determinants of Cross-Border M&A Performance: Evidence from Innovative Deals Initiated by Acquirers from BRICS in Developed Capital Markets
Over the past two decades, due to the markets globalization, we can observe the growth of international mergers and acquisitions. A distinctive feature of this trend is the active participation of companies from developing countries that carry out these transactions when buying companies in developed markets. One of the main motives for such transactions is access to more advanced technologies, innovations that have no analogues in domestic markets of developing countries. The purpose of this work is to identify the determinants of the effectiveness of international M&A transactions in the innovative sector initiated by companies from developing countries when buying innovative companies in developed capital markets. In this study, the international M&A transactions initiated by companies from the BRICS countries with the purchase of innovative companies in the developed markets of America, Europe, the Middle East and the Pacific, from January 2010 to January 2017, were considered. The sample included 262 observations, and the following results were obtained: (1) on the average considered transactions are effective for the companies-buyers from the developing capital markets, (2) the deal will be more effective if a high-tech company is acquired, (3) the high profitability of the target company's assets before the transaction is also a contributing factor to this efficiency, (4) the deal will be less effective with a horizontal type of acquisition, (5) the destructive factor will also be the bigger size of the target company in relation to the size of the buyer company.