Where is the Best Place to Do Mergers & Acquisitions? Economic Attractiveness as Related to Law

In a Doing Business report published by the World Bank, the following statement was suggested: “From the economic point of view, common law is more efficient than civil law”. The objective of this research paper is to weigh two legal systems (French civil law and the U.S. common law) and analyze the results of the economic analysis of the law of Mergers and Acquisitions (M&A). This is done by quantifying the impact on long-term performance. To carry out this research, a methodology was developed, and the results were evaluated. Two legal structures for M&A transactions were selected: the purchase of shares (share deal), and the purchase of assets (asset deal). Each of these acquisition structures was then subdivided into 11 steps — from preliminary information, letter of intent, due diligence, stock or asset purchase agreement and closing — to litigation with formal summons. Performance was then measured by taking into account time, cost and satisfaction factors. Time was broken down into person-days and the number of days, weeks, or months required to complete each step. French and U.S. respondents were asked to fill out a questionnaire for a specific M&A transaction. Radar charts were used to compare the mean of each performance factor; an inter factor analysis was carried out to check for correlations. The findings showed that a share deal in France is cheaper than in the U.S. Also, French participants express a greater degree of satisfaction than their U.S. counterparts. The findings varied however, for the time factor. The authors conclude that the application of civil code and common law does not reveal substantial differences in either country for M&A transactions. One reason may be that in both France and the U.S., these transactions are carried out according to similar procedures