M&A flows and the foreign exchange markets:practical experiences

The large cross-border Merger and Acquisition flows of the last three years were seen by financial markets as one of the factors behind movements in exchange rates. However, the extent to which an M&A-transaction actually leads to a foreignexchange transaction is dependent on the financing and transaction techniques used and is difficult to measure. In this article, we analyse which considerations underlie the decisions of corporate Treasurers regarding the financing of take-overs and the techniques to be used by forex transactions. We investigate the effect Treasurers believe M&A transactions have on exchange rates and examine whether different techniques make for different effects. The information was obtained through interviews with Treasurers of multinationals conducting large-scale M&A activities.