Cross–border mergers and acquisitions in developed countries: a study in 2008-2009

Abstract

In 2008, the value of cross-border mergers and acquisitions (M&A) sales of developed country companies fell by 39 %, approximately their 2006 level, and the number of such M&A deals fell by 13 % as the financial and economic crisis made a dampening effect on cross-border M&A activity. Data for 2009 show a continuing downward trend: the number of high value M&A deals fell sharply, as banks avoided financing such transactions in the prevailing landscape of high and rising risk. In addition to lack of finance, the decline in the value of M&A transactions has been driven by sharp falling stock prices on developed countries’ stock markets – where stock market indices plunged. The decrease in total cross-border M&As has had a significant impact on FDI flows, as they are strongly correlated with the value of cross-border M&A transactions. One outcome of the crisis is that a number of large privatization projects have had to be cancelled.