The International Market for Corporate Control

This paper documents a set of stylized facts about recent trends in cross-border M&A (CBMA) activity around the world. The facts focus on key features of CBMA such as (i) the magnitude; (ii) how it varies across industries and locations; (iii) how it compares to levels of greenfield FDI over time; (iv) horizontal (market access) versus vertical (integrating supply chains) transactions; (v) the mode of financing; (vi) diversifying transactions versus those in the same industry; (vii) patterns of control acquisition; and (viii) strategic versus financially motivated transactions. The paper also examines whether the nature of cross-border M&A activity differs across developed and emerging markets. Next, it considers the incentives for firms to buy firms in other countries and to sell divisions to foreign buyers and examines the evidence about post-acquisition outcomes. The paper concludes with a discussion of policy challenges that confront governments as they weigh the balance of national security concerns against a desire to increase foreign investment in their economies.