Naked M&A Transactions: How the Lack of Local Expertise in Cross-Border Deals Can Negatively Affect Acquirer Performance – and How Informed Institutional Investors can Mitigate This Effect


  • Anna Faelten,

  • Miles Gietzmann,

    Corresponding author
    • Address for correspondence: Miles Gietzmann, Faculty of Finance, Cass Business School, 106 Bunhill Row, London EC1Y 8TZ, United Kingdom.


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  • Valeriya Vitkova

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    • The authors are respectively from M&A Research Centre, Cass Business School. The authors would like to thank the participants of the 2013 JBFA conference for helpful comments and in particular the Associate Editor, Paul Andre. As part of this research was funded by the M&A Research Centre the authors would like to express grateful thanks to its sponsors, AXA Private Equity, Credit Suisse, E&Y and Mergermarket for their support and practical guidance. The contents of this report reflect the views of the M&A Research Centre and do not necessarily reflect the views of the sponsors of the Centre.


This paper tests how informed investors with local expertise can affect cross-border deal success using a comprehensive dataset of corporate acquirers’ share registers. We posit that deals in which long-term investors have a high level of expertise in the target firm's region are more likely to perform better than if the deal is ‘naked’, i.e., when such regional expertise amongst the investors is low. We show that the strength of this effect depends upon an index of country-level M&A maturity which measures the relative divergence between acquirer and target countries. Specifically, we investigate whether acquirers investing in countries with low M&A maturity gain greater benefit from investors with regional expertise. We present evidence which confirms the hypothesis that acquirers in cross-border corporate transactions are more likely to be successful if the acquirer's investors have a higher level of expertise in the target region, and that this effect is strongest when the maturity for corporate transactions of the target country is low. This provides a specific setting which is consistent with earlier theoretical work that argues in general that information flows should not just be from firms to capital markets but also in the opposite direction, and that this flow of information is particularly important whenever information is dispersed.