Weighting protectionism
Retaining so-called "Golden shares," shielding "national champions" - old fashioned protectionism is resurfacing in Europe and around the globe. A new atlas helps investors navigate these changing realities.
In his presidential campaign, Nicolas Sarkozy emphasized the protection of "national champions" in key areas of French industry, winning over voters fearful of the effects of globalization. His comments were emblematic of a creeping protectionism that is making foreign investments and acquisitions a more difficult game.
Now, André Schmidt, Professor and Chair of International Economic Policy at the European Business School (EBS) has developed an atlas of sorts, to help investors navigate the tumultuous waters of international mergers and acquisitions. His findings? Belgium, Denmark, Great Britain, Ireland, Iceland and the USA lead the pack, in terms of facilitating M&A activity. France, Italy, Norway, Turkey and Hungary lag behind.
In an exclusive article for Roland Berger Strategy Consultants' executive magazine 'think:act' the researchers reveal their methodology, which included developing and "openness scale" from zero to six, to describe the opportunities for M&A activity, where zero is most open to foreign acquisitions and capital investments, and six represents the polar opposite.
In his presidential campaign, Nicolas Sarkozy emphasized the protection of "national champions" in key areas of French industry, winning over voters fearful of the effects of globalization. His comments were emblematic of a creeping protectionism that is making foreign investments and acquisitions a more difficult game.
Now, André Schmidt, Professor and Chair of International Economic Policy at the European Business School (EBS) has developed an atlas of sorts, to help investors navigate the tumultuous waters of international mergers and acquisitions. His findings? Belgium, Denmark, Great Britain, Ireland, Iceland and the USA lead the pack, in terms of facilitating M&A activity. France, Italy, Norway, Turkey and Hungary lag behind.
In an exclusive article for Roland Berger Strategy Consultants' executive magazine 'think:act' the researchers reveal their methodology, which included developing and "openness scale" from zero to six, to describe the opportunities for M&A activity, where zero is most open to foreign acquisitions and capital investments, and six represents the polar opposite.
To determine each country's place on the scale, the researchers evaluated three factors: They first asked how much foreign companies can really invest in domestic companies. Second, they weighed market structures, the size of the public sector as well as government investment in private companies against one another, which all have an impact on general openness. Third, they examined the existing national legislation that can limit foreign owners' room to maneuver.
Click to enlarge table
Their final analysis revealed the following results:
By comparing these indexes over time, using 1998 as a base-line, the team was able to highlight which OECD countries had taken concrete action to improve framework conditions for mergers and acquisitions, while both highlighting the 'hidden champions' that are most open to these kind of investments and the 'closed circle,' which make foreign M&A most difficult.
The newest edition of 'think:act' will be published in late September 2007.
If you have questions or comments regarding this, or any other story, please do not hesitate to contact us:
The newest edition of 'think:act' will be published in late September 2007.
If you have questions or comments regarding this, or any other story, please do not hesitate to contact us:
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