Cross Border Mergers and Acquisition

AlinaAlina    15 March 2022
Cross Border Mergers and Acquisition

Cross-border mergers and acquisitions (M&As) have expanded dramatically in recent years, hastening the globalization of industry and changing the worldwide industrial structure. In the 1990s, foreign direct investment tended to focus on mergers and acquisitions rather than new ventures.

There is a growing trend toward very large-scale unions.  They largely include OECD countries and have grown their proportion of cross-border mergers and acquisitions.

 M&As are occurring across a variety of industries, inclusive of manufacturing, high-tech disciplines, and service sectors, and reflect a need to restructure and enhance global supply chains. The forces that are driving the trend toward cross-border mergers and acquisitions are getting difficult day by day and vary by sector. 

Long-term economic expansion in countries like the United States boosts capital investments for international industrial purchases and draws additional inward investment. Globalization of financial markets also plays a crucial role. Government measures like investment liberalization, privatization, and regulatory change are also contributing in accessing these opportunities of cross border merger and acquisition.

When successful industrial restructuring leads to improved efficiency without undue market concentration, cross-border mergers and acquisitions can pay off in terms of corporate performance and profitability. They can assist revive faltering businesses and local economies, as well as create jobs, through restructuring, technology acquisition, and productivity development. However, governments' willingness to M&As involving foreign corporations has varied greatly.Government policies in areas like investment, competitiveness, labour, and technology mustencourage this.

Companies participate in cross-border M&A for a variety of reasons, including to increase their market position, diversify their operations, procure resources, or achieve efficiency by reorganizing their company globally. M&As allow businesses to rapidly capitalize on new market possibilities and develop a critical mass in a given market.Cross-border mergers are heavily influenced by industry features such as development prospects, market structure, and rivalry. Slow growth, overcapacity, and greater rivalry in global markets are common reasons for industrial restructuring, and M&As are frequently preferred over greenfield investments.

 

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax

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