Journal of Business & Financial Affairs

Characteristics of International Acquisitions Based on Evidence in Southeast Asia

Abstract

Khaliq IH*, Naeem B, Abbas Q and Khalid S

This study investigates large cross border deals above USD 1 billion during the 2000 to 2011 time frame to explore whether deal values, valuation multiples and payment modes differ for acquisitions by emerging market firms when compared with acquisitions by developed market acquirers; for diversified acquisitions vis-à-vis non-diversified acquisitions; or during a recessionary phase.

We find that mean deal values differ with the economy of the acquirer and target (emerging market/developed market). Contrary to expectations, valuation multiples are not impacted by either the economy of the acquirer and target or during recession. Bidders pay similar premiums when they make related and unrelated acquisitions. Payment is more likely to be in the form of cash for unrelated acquisitions and in the form of stock for higher deal values. Recession and economy of acquirer and target do not impact the payment method.

There are several research studies which have looked at characteristics of acquirers, targets and market reactions to acquisition announcements. However, understanding emerging market firms' deal characteristics vis-à-vis developed market firm's deals and understanding the impact of recession on deal characteristics raises a significant research question which we explore.

We thank FOBE 2012 organizers at IMT Ghaziabad, India for comments on an earlier version of the paper.

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