Cross-border M&A deals historically have a failure rate of up to 70% (as reported in 2019), however, there are actions that companies can take to improve the likelihood of success. According to Dealsuite’s March 2025 report, 42% of deals in the second half of 2024 involved a foreign partner, and advisors reported that 57% of clients welcomed a foreign buyer. This broadens opportunities to find a suitable deal and the right price. 

With nearly 80% of advisors in Northern Europe (Denmark, Finland, Iceland, Norway, and Sweden) witnessing an increase in cross-border transactions in small-to-medium businesses in the past five years, it’s time for organizations to ensure they are equipped to navigate cross-border M&A. 

While cultural differences frequently contribute to cross-border M&A failure, these may not be the sole or primary contributing factor when a deal goes sideways and fails to deliver the expected results. Politics, regulatory restrictions, and operational factors also play a role. Post-merger integration is critical for success, and the planning must begin early in the M&A process, during due diligence or even target selection. 

Analyzing past Northern European cross-border M&A can identify the reasons for failure and ensure that today’s leaders are prepared with tools and strategies to succeed.

When is a merger or acquisition deemed to have failed?

A merger or acquisition is deemed to have failed if the transaction does not close after due diligence and negotiations, or if the two companies fail to integrate after the deal closes, spinning off or carving out one party to the deal.

Case study: turning a decade of M&A failure into success

Cross-border M&A comes with challenges, from regulatory variations across jurisdictions to financing and culture. Cross-border mergers of European telecommunications companies are littered with failed takeover attempts between former state monopolies.

This case study from the DACH region in Europe considers why cross-border M&A fails, and how one company turned around a decade of failed acquisitions to achieve international expansion with successful cross-border M&A. 

Swisscom’s decade of failed cross-border deals

Swisscom, a Swiss telecommunications company, had a decade-long history of failed cross-border mergers and takeover bids between 1995 and 2005. Swisscom’s failed acquisitions spanned countries including Austria, India, Malaysia, and the Czech Republic.  

The most famous of Swisscom’s failed M&A deals was the attempted acquisition of Telekom, an unusual deal in which the Austrian government agency requested special voting powers on the 11% stake it would receive in the combined company. 

The political controversy ended an 18-month-long negotiation process to take over Telekom Austria in 2004. While support for the deal was low in Austria, following the announcement ending negotiations, Telekom Austria’s shares fell by more than 19% while Swisscom’s remained stable. 

Previous failed M&A at Swisscom included purchasing a large stake in a Czech operator in 1995 that was later sold at a discount, repeating this in India and Malaysia in 1996, investing in Austria’s UTA before once again selling at a loss in 1998 and finally losing money on an investment in a German operator in 1999.  

Turning around Swisscom’s M&A fortunes

CEO Jens Alder resigned in 2006 to be replaced by Carsten Schloter, who was previously in charge of the company’s mobile phone division. Alder’s ambitious approach to M&A had conflicted with the Swiss government’s position. The state, a 67% stakeholder, opposed the plans to acquire foreign fixed-line telecommunications companies. Incoming CEO Schloter’s approach to M&A was more cautious, focusing on organic growth and strategic acquisitions that aligned with Swisscom’s core competencies in internet and mobile operations. 

Swisscom went on to complete 15 acquisitions between 2007 and 2024. The first notable acquisition was Fastweb, a broadband operator in Italy, in 2007. The Fastweb acquisition did not directly challenge government restrictions, breaking the chain of failed acquisitions and setting up Swisscom for future M&A. The most recent Swisscom acquisition was a 100% stake in Vodafone Italia, purchased for $8.71B on 19 March 2024. This acquisition strengthened Swisscom’s presence in Italy.

How to succeed in cross-border M&A

When cross-border M&A is successful, the rewards are significant. Since 1991, German companies have announced more than 908 acquisitions in Switzerland to a total value above €42.6 billion, and since 1985, Swiss companies have announced over 847 acquisitions in the US, with a total value above €236 billion. 

So, what is the secret to a successful cross-border deal? Each of the insights below includes an example that demonstrates why it matters. 

Understand the political and regulatory environment

Getting key stakeholders aligned on M&A strategy before beginning a cross-border takeover is critical ahead of a merger or acquisition. Both parties must understand the government and regulatory restrictions both in their home country and the country of the target or buyer. 

It can help to involve regulators and other key stakeholders early in the process to identify and address any potential checks and balances or hurdles that need to be addressed. This can help avoid wasting time and resources on a target or buyer that is not an ideal fit. 

Learn more: The regulatory tide is turning: how ESG and geopolitics are reshaping German M&A

Example: Vodafone Group and Three UK (2024) 

On 5 December 2024, the UK Competition and Markets Authority conditionally approved the merger of the two companies, mandating specific remedies. This pragmatic approach marks a departure from an eight-year precedent and may open up new opportunities in Europe’s M&A landscape. 

This 4:3 merger reduced the number of players in the telecommunications industry. The regulatory decision took more than a year to conclude that competition and consumers would benefit from the deal in the short and long term. 

Accurate forecasting of market conditions and competition

When a company has saturated a local market or risks becoming obsolete in the face of competition and modernization, M&A is one way to expand horizons, enter new markets, and acquire new capabilities. 

Assessing the opportunities that a particular deal presents accurately, during the due diligence process and also during the target or buyer scoping, can ensure that the company pursues deal negotiations that are more likely to result in a successful outcome.

Example: Swisscom and Fastweb (2007)

By focusing on core competencies and leveraging opportunities within the existing market and regulatory environment, Swisscom was able to undertake the first successful acquisition in a decade, acquiring broadband company Fastweb and setting the stage for a further 14 successful acquisitions that would follow. This approach was successful where previous attempts to acquire fixed-line telecom companies had failed. 

Deal structure and pricing

While some concessions may need to be made during the negotiation stages based on the findings of due diligence, the size and structure of the deal should match expectations from both parties. 

Example: In 2021, research by DealSuite found that mid-market companies in the DACH region, including Germany, Austria and Switzerland, were valued 19% higher than those in the Netherlands. Understanding the valuation differences across borders can help companies pursue value-building cross-border M&A. 

Cultural and strategic alignment

Cultural due diligence is key and should form part of the HR due diligence. Companies should begin developing the post-merger integration plan during the due diligence phase, identifying where there is alignment and where there is risk. This might begin by identifying the common elements of company culture and defining how the new company will behave. 

A compromise between a tight, hierarchical structure and a loose, flat structure may provide balance and continuity in the new combined company, but this will need to be defined and clearly communicated. Language and national culture may also present challenges with communication, and strategies to alleviate friction must be put in place to allow effective collaboration and realize synergies. 

Effective communication with employees and the public is important. 

Example: Daimler-Benz and Chrysler (1998)

In 1998, Daimler-Benz and Chrysler merged to form DaimlerChrysler in one of the largest industrial mergers at the time. The significant cultural differences between Daimler-Benz, a German luxury-focused company, and Chrysler, an American price-conscious organization, ultimately led to a failure to integrate. 

There was significant resistance to the merger from within both companies, and expected benefits like cost savings and market expansions were not realized. DaimlerChrysler broke the parts-sharing agreement with the American manufacturer and sold Chrysler to a private equity firm in 2007.

Optimizing M&A processes for cross-border deals

Pre-deal due diligence, strategic alignment, cultural integration, and post-deal integration all determine the outcome of a cross-border merger or acquisition. 

Identify and address risk early

Identifying and mitigating risk before entering deal negotiations can prevent loss of time and resources later in the deal process. The due diligence process is critical for identifying these risks and to ensure there are no surprises. 

Issues the deal team will need to focus on include national and regional tax laws, the availability, accuracy, and reliability of the target’s financial information, the political stability of the country, and the extent to which it complies with the laws of the buyer’s home country. 

Other regulatory issues to uncover include labor issues, minority investment issues, and antitrust laws. 

Pre- and post-deal planning

A global survey undertaken by Deloitte found that executives identified that the areas of M&A that required the most improvement were longer planning timelines, more research on the prospects' market and company culture, and the strength of the negotiations. 

Country-specific integration sequencing and a thoughtful global integration strategy can aid in a smooth transition. 

Avoid the pitfalls of cross-border deals and prepare for successful M&A 

Strong and stable economies and a low-risk business environment make the Nordic region attractive for dealmakers seeking international transactions. As borders fade and increasing digitalization connects countries, the M&A market opens new cross-border opportunities. 

Plan for a successful acquisition or merger with a clear strategy and organized workflow. Ansarada’s deals platform has built-in AI features that include AI-redaction to streamline preparation for due diligence, and Bidder Engagement Scoring, which reaches 97% accuracy by day 7. Take the uncertainty out of cross-border M&A with a purpose-built platform that makes deal-making easier for buyers, sellers, and advisors.

Frequently asked questions

How do geopolitical factors influence the success of cross-border M&A?

Trade policies, tariffs, sanctions, and political tension can create uncertainty, which may disrupt business on many levels, from supply chains to customer demand. Uncertainty and a volatile regulatory environment can create challenges in achieving synergy and growth, make financing more challenging, and may result in fewer deal closures. 

What is an example of cross-border M&A?

In July 2024, Italian car manufacturer Stellantis sold a majority stake in its industrial automation and robotics specialist Comau to One Equity Partners, a private equity firm active in healthcare and technology in North America and Europe. 

More on M&A: 

• Cross-border M&A insights: key opportunities and challenges for the coming year (August 2024)

• EUMI M&A at a turning point amidst global uncertainty (November 2024)

• Rising M&A activity: how adaptability and technology are driving Australia & NZ deals forward (August 2024)