Companies merge and acquire for nine reasons: market share, talent, market entry, lower costs, tax position, diversification, future value, survival, and denying a rival. Market entry and talent are the two that most often justify a cross-border deal, because both are slow and expensive to build alone.
Worth holding alongside all nine: a substantial share of deals fail to increase market value, with failure rates commonly cited between 40% and 60%. The reasons below explain why deals happen, not why they work. Last updated September 2026.
| Benefit | Typical motivation |
|---|---|
| Market share | Consolidate a fragmented industry |
| Talent | Skills too scarce to recruit individually |
| New markets | Buy presence instead of building it |
| Lower costs | Scale improves bargaining power |
| Diversification | Reach customers your product does not |
| Future value | Acquire before the market prices it |
| Survival | Pool resources through a downturn |
| Denial | Stop a competitor acquiring first |
The most direct benefit. Acquiring competitors in your own industry consolidates the share they held into yours.
The Exxon and Mobil merger in 1998 is the reference case: the two largest US oil producers combining into a single dominant position. Consolidation on that scale usually attracts regulatory scrutiny, which is itself a factor to plan for.
In specialised fields, the people who can do the work may number in the dozens. If they already work somewhere, hiring them individually is slow and often impossible.
This is common when a new technology emerges and the expertise is concentrated in a handful of firms. Buying the company is sometimes the only realistic route to the team.
The corollary is that retention becomes the whole point. An acquisition made for talent that loses that talent within a year has bought nothing. See how to merge two teams into one.
Buying presence rather than building it.
Establishing in an unfamiliar market means cultural differences, language, local regulation and an entity to register. An acquisition gets you an operating business with customers, staff and supplier relationships already in place.
It is the fastest route and the most committing. The alternatives, including lower-commitment options, are compared in six methods of international expansion.
Scale improves your position with suppliers, and duplicated functions can be consolidated.
Larger organisations also access capital on better terms. The savings are real, though they typically arrive later and smaller than the deal model assumed.
Acquiring in another country can bring a more favourable tax position, and some governments offer specific reliefs around acquisitions.
Treat this as a secondary benefit rather than a reason. Tax rules change with each budget, and structuring a deal primarily around a tax position that may not survive the next administration is a poor basis for a permanent commitment.
Bringing products, services or customer segments under one roof that your existing business does not reach.
Meta's acquisitions of Instagram and WhatsApp are the clearest example: identifying demographics not engaging with the core platform, then buying the platforms they were using instead of trying to win them back.
Acquiring something before the market fully prices it.
Disney's purchase of Marvel in 2009 followed Iron Man's success the previous year. The scale of what came afterwards was not predictable, but the direction was visible to anyone paying attention.
In downturns, merger activity rises, because pooling resources is often more survivable than continuing alone.
The 2008 financial crisis produced exactly this pattern in banking, with consolidation driven by necessity rather than ambition.
Sometimes the point is that your competitor does not get it.
Defensive acquisitions are common in consolidating industries, where a target passing to a rival would materially change the competitive position. The logic is sound, though it produces deals justified by what is prevented rather than what is gained, which makes them harder to evaluate afterwards.
Integration, not price.
Cultural mismatch, losing the people the deal was made for, and systems that do not combine as planned account for most of the gap between expected and realised value. The commonly cited 40% to 60% failure rate is measured on whether the deal increased market value, not on whether it completed.
Two practical points for cross-border deals specifically.
Foreign ownership restrictions. Many countries limit foreign ownership in defence, media, energy, telecoms and transport. Establish this before you spend money on diligence.
You may not be able to employ the people you acquire. If the target has staff in countries where you have no legal entity, you cannot put them on payroll, and completion will arrive long before an incorporation could. An Employer of Record employs them locally from day one, which removes a gap that is otherwise weeks or months of uncertainty for people already unsettled by the transaction.
The same applies in reverse during a divestiture. We handled this for VMware during its separation from Dell, completing global transfers ahead of schedule.
We employ people on your behalf across 214 countries and territories, including through acquisitions, divestitures and restructures where the legal entity does not yet exist.
Country requirements are in CountryPedia. Talk to our team about the transaction you are planning.
It depends on the motivation, but market entry and access to talent are the two that most often justify a cross-border deal, because both take years to build organically and can be bought outright.
In a merger two companies combine into a new entity. In an acquisition one company takes over another, which continues to exist within it or is absorbed. The practical distinction often matters less than how the integration is handled.
Integration rather than the deal itself. Cultural mismatch, loss of key people and systems that will not combine account for most failures. Estimates commonly put the share of deals that fail to increase market value between 40% and 60%.
No. Many countries restrict foreign ownership in sensitive sectors including defence, media, energy, telecoms and transport. Check the restrictions in the target's jurisdiction before committing to diligence.
It depends on jurisdiction, and employment protections vary considerably. In cross-border deals the immediate practical question is whether the acquirer can legally employ them at all, which requires either an entity in that country or an Employer of Record.
Communicate early and often, involve both sides in decisions rather than announcing them, and make sure senior roles are not all allocated to the acquiring side. People decide whether to stay in the first few weeks, largely on how the process feels rather than what is promised.