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With the continuing globalization of many formerly regional industries, cross border mergers and acquisitions (M&A) that shift corporate control from one country to another, are attracting increasing levels of attention. To understand this phenomenon more fully, Accenture launched an initiative to study cross border changes in company ownership.
This research provides a new fact-based perspective on cross-border M&A and the global market for corporate control. Business leaders and policy makers can use it to help them know where they stand when assessing their country’s relative performance in this market since the onset of the financial crisis and to inform them as they work through potential implications for local economies.
Cross-border M&A transactions that result in a change of corporate control can have a pronounced impact on the process of international economic integration. To better understand global corporate control shifts, Accenture asked three critical questions:
How has the global market for corporate control developed?
Which countries drive the market for corporate control?
Which nations have gained or lost corporate control and what impact do these changes have at the industry level?
To answer them, Accenture conducted this comprehensive study of cross-border M&A deals that took place between 2003 and 2012 in the largest 30 economies worldwide. In the process we examined more than 55,000 cross-border M&A transactions with a total deal value of over US$6.2 trillion.
Japan, China, France, India and Switzerland gained the largest corporate control “surpluses” over the past five years in absolute value terms (measured as the value of acquisitions that resulted in cross-border changes of corporate control, less the value of corresponding divestitures). In contrast, the US, the UK, Australia, Sweden and Norway listed by size suffered the largest corporate control deficits.
A country’s acquisitions and divestitures take on a different significance when measured relative to the size of its economy. This is most notable for Switzerland, which had similar cross-border acquisition values compared to, say, China with its ten-time larger economy. Switzerland also ranks highest in terms of net totals in relation to GDP.
The financial crisis fundamentally changed the M&A corporate control landscape, strongly elevating five economies in terms of corporate control. In moving from the 2003-07 period to 2008-12, Canada gained 18 positions, China 16, Taiwan 13, South Korea 10 and Belgium 10. Our research also shows that Asia is clearly on the rise:
All Asian economies increased their outbound investments, not only in relation to the cross-border M&A market but also in absolute terms.
All moved up in the corporate control rankings.
These economies increased their influence in the corporate world as they all (barring Indonesia) achieved a corporate control surplus.
Corporate control can be an important factor when it comes to the strategic agility of an economy in adapting to a changing environment or simply when pursuing national interests in a global economy. Having strong people networks that include and involve top executives and top talent are among the critical incubators for the emergence and evolution of entrepreneurial skills and capabilities. Furthermore, corporate decision-makers are often far more influenced by the politics and cultural and ethical values of their home countries.
While growing levels of corporate control can bring significant benefits to an economy, the urge among policy makers to influence the flow of corporate control directly can present significant risks. Aggressive measures to foster acquisitions abroad could result in the neglect of demand for investments at home, while boosting protectionism as a defensive measure could result in weak economic growth.
Mirko Dier is an executive partner and leads Accenture’s Mergers and Acquisitions practice globally, as well as the Strategy practice in Germany, Switzerland and Austria. Dier holds a master’s degree in business administration and an executive MBA degree from Kellogg. He is based in Munich.
Dr Moritz Kübel is a senior manager in Accenture’s Global Strategy/M&A practice and leads the research initiative “Global Controlling Interest”. Dr Kübel holds a master’s degree in business administration and a Ph.D. in economics. He is based in Munich.
Dr Sarah Ali is a manager in Accenture’s Global Strategy/M&A practice and has published several articles on M&A. Dr Ali holds a master’s degree in business administration and a Ph.D. in Finance. She is based in Munich.
Oliver Warnken, CFA® is a manager in Accenture’s Global Strategy/M&A practice. Mr Warnken holds a master’s degree in business administration and the Chartered Financial Analyst® designation. He is based in Frankfurt.
November 1, 2013
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