Furthermore, strong euro-cash balance sheets are sufficient to fund expansion. The credit squeeze has moved some private equity buyers to the sidelines, reducing the bid competition that drives up acquisition costs.

In addition to heightened interest in US acquisitions, buyers who do not find what they want are also considering greenfield investments. Many site selection searches are now carried out in tandem with acquisition searches. Either way, as companies seek to serve the US market with dollar-based production, they may also begin to export from the US. Exports of US manufactured goods are up 12% during the past year; imports of manufactured goods rose less than 2%.

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Interestingly, while the world’s companies and investors are increasingly and continually finding their way to the US, the US’s own companies look to increase their earnings (and assets) in currencies that are appreciating. US stock brokers recommend companies with strong international earnings, so FDI from the US is also on the rise. Tempering these trends is the difficulty in achieving increased value following an acquisition. Localities with newly acquired businesses are seldom alert to what it takes for local operations to be among the most successful in an acquirer’s portfolio.

International companies in the US reinvest and expand (last year nearly $50bn, representing 45% of their income), but only in the places that survive post-acquisition rationalisation. Many promotion agencies in the US and abroad pay little attention to newly acquired operations – ‘that’s another department’ – despite the potential for bad as well as good local consequences.

Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations.

Email:malachuk@oxford-analytica.com