Closing the deal faster: the role of institutions and government involvement in cross-border M&A completions in Brazil

Abstract

Purpose This paper aims to reveal how institutional distance, institutional quality and government involvement may shorten M&A deal durations in Brazil. Therefore, t paper explains the determinants of M&A deal durations from the perspective of an emerging country acquirer. Design/methodology/approach The authors use a distinctive data set from the Thomson SDC Mergers and Acquisitions Database and Zephyr, covering both public and private M&As in Brazil. This sample includes all cross-border M&As in Brazil between 2000 and 2015. They used hierarchical ordinary least squares (OLS) regression to analyze the data set. Findings The findings show that informal institutional distance between Brazil and host countries does not impact deal durations when the target is from a developed host. Nonetheless, Brazilian deals involving developing country targets exhibit a positive association between institutional distance and deal durations. The results also reveal that stronger institutional quality reduces the duration of M&A deals executed by Brazilian firms in developed countries. However, no association was found in emerging countries. Finally, government involvement in Brazilian acquirers’ deals did not impact M&A completions in developed countries but prolonged the transactions in emerging countries. Therefore, the outcomes of government involvement occurred differently in developed and emerging host countries and did not manifest as a resource-based advantage. Originality/value The authors extend the literature by simultaneously explicating the country-, i.e. institutional distance and institutional quality, and firm-level, i.e. government involvement effects on M&A deal duration from an emerging country acquirer perspective. Second, the authors shed light on the unique impact of government involvement in cross-border M&As, including emerging-developed and emerging-emerging country pairs, on the speed of M&A completions.