Global Expansions 'To' versus 'From' Emerging Markets : An Empirical Study of the Completion of Cross-Border Mergers & Acquisitions

While cross-border mergers and acquisitions (M&As) involving emerging markets have been increasing in recent years, a high percentage of them collapse before completion. This study investigates how the predictors of cross-border M&A completion involving emerging markets depend upon the direction of global expansion, i.e., investment inbound to a developing market or investment outbound to a developed market. Analysis based on 30 years of data from the two largest-emerging markets, China and India, reveals fundamental differences in the predictors of inbound vs. outbound M&As completion. Inbound transactions are found to be most influenced by country-level factors reflecting differences in political, trade, and legal environments. By contrast, outbound transactions are most influenced by firm-level factors such as the initiator's size and experience. Furthermore, deal-level factors, (e.g., percentage of stake sought by the acquirer, whether the deal size is disclosed, and whether the deal is a cash transaction), have significantly different effects on inbound and outbound M&As. These findings have important managerial implications for enhancing the success of global expansions