The Era of Cross‐Border M&A: How Current Market Dynamics are Changing the M&A Landscape |
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| Authors: | Marc Zenner Matt Matthews Jeff Marks Nishant Mago |
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| Institution: | 1. Managing Director on J.P. Morgan's Capital Structure Advisory & Solutions team. He focuses on value‐maximizing solutions with respect to valuation, cost of capital, capital structure, credit ratings, distribution strategies, and risk management in the context of M&A and financing transactions.;2. We would like to thank Andy Chi, Amra Coralic, and Jessica Vega for their invaluable contributions to the analytics and construction of this report. We would also like to thank Zubaid Ahmad, Kelly Coffey, Therese Esperdy, llen Friedman, Chris Harvey, Henry Higbie, Scott Hill, Juan Langlois, Alton McDowell, Robert Principe, Jill Schwartz, Mark Shifke, David Topper, Andrew Van der Vord, and Jeannine Zito for their helpful comments and suggestions. Special thanks are due to Colleen Galle for her insights, guidance, and support in writing and publishing this report.;3. Managing Director on J.P. Morgan's Capital Structure Advisory & Solutions team who specializes in foreign exchange, interest rate and commodity derivative structuring and hedge accounting solutions.;4. Vice President on J.P. Morgan's Capital Structure Advisory & Solutions team, with expertise in tax structuring for M&A and capital markets transactions.;5. Associate on J.P. Morgan's Capital Structure Advisory & Solutions team. He advises clients on a variety of corporate finance issues, including capital structure, cost of capital, distribution strategies, and option/derivative valuation. |
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| Abstract: | Rising equity volatility, surging energy prices, a weakening dollar, and widening credit spreads are influencing both tactical financing decisions and long‐term financial strategy. Amid this turbulence is a quickly changing global M&A landscape that portends long‐term opportunities to deliver value to shareholders. In this environment, the authors offer the following suggestions for U.S. multinationals: (1) continue looking overseas for well‐positioned targets, especially in emerging markets, even in the context of a weak U.S. dollar; (2) consider using their financial flexibility for opportunistic deals today now that asset values are contracting; and (3) critically evaluate non‐core assets at home or abroad that might be valuable to cross‐border acquirers. For multinationals in Europe and developing economies, the time may be right to consider transformational cross‐border “megadeals.” Emerging‐market companies have the opportunity to buy low and sell high by using high‐valued equity as an acquisition currency, particularly to gain access to developed markets. Companies in need of new capital should consider the financial and strategic benefits of selling minority stakes to a sovereign wealth fund or other foreign partner. |
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