Question

Why are other countries moving towards international merger activity, especially US companies?

Answer 1

Soon after the economic reforms in various countries, globalisation has started to take good pace. International mergers started across the globe with US being no exception. Starting from 20th century it has become a trend for most of the US based companies to get into amalgamation or mergers not only within US but also with companies of other countries.

The main advantages being that it helps in FDI due to such cross border investment in companies. It gives an option to international companies to invest in various sectios which otherwise would not have been possible by direct investment. Thus acquiring stakes of another company or through the process of merger, it gives an opportunity to companies to enter such fields.

It also gives access to the local markets of foreign countries. It also helps in easily getting the customer base which would otherwise not be possible if a company startes freshly. It gives an opportunity for developing countries with an access to technical knowhow of developed countries and shall help them in more and more aggressive investments in the field of research and development.