The Momentum of Cross-Border Deal-Making

While the pandemic, US-China trade tensions, and other macroeconomic factors dampened international deal-making, cross-border M&A seems to be on the rise. Several key factors contribute to this trend:

1. Global Connectivity: The new reality of fully remote deal-making alleviates one of the traditional struggles of cross-border deals. Technological advancements are connecting investors with entrepreneurs and management teams worldwide. Online platforms and networking events facilitate cross-border interactions.
2. Leveraging Global Talent and Expertise: Investors recognise the importance of diverse and experienced management teams who foster innovation and drive growth across markets.
3. Sector and Industry Dynamics: Certain industries require market-specific knowledge and resources. In the energy or mobility sectors, for example, acquiring a local team may allow a company to quickly capitalise on local market dynamics rather than building new operations from scratch.
4. Economic and Regulatory Factors: Favourable economic conditions or investor-friendly regulations encourage cross-border investments. Currency impacts, such as UK targets being relatively less expensive for US investors in Q3 2022, also enhance the appeal of cross-border deals.

Europe has consistently been a popular region for cross-border activity, accounting for an average of 13% of all North American M&A activity over the past two decades. It remains an obvious choice for investors seeking foreign exposure in relatively robust and innovative markets. According to Pitchbook, European M&A activity by North American acquirers amounted to $315.3 billion in 2022, 21.2% of total European M&A value.

Companies must recognise the value they may bring to foreign investors or buyers. Cross-border deal-making can be mutually beneficial, allowing both parties access to new markets and resources. Engaging with an investment bank with experience in cross-border transactions may be beneficial for mid-market companies looking to unlock their true potential.