US Companies hold more than US$ 1 trillion on offshore cash reserves
Офшорные резервы американских компаний составляют более 1 трлн долларов США

US Companies hold more than US$ 1 trillion on offshore cash reserves

In an article published on the McKinsey website in June 2017, the consultancy calculates that more than US$ 1 trillion is hold on offshore cash reserves by Fortune 500 companies. Interestingly, only 10 companies hold more than 70% of this cash reserve.

Most think that the solution is in repatriation of these cash reserves, taxable or not.

However, this is part of the ‘capitalist dilemma’: corporations are sitting on massive amounts of cash and failing to invest in innovations that might foster growth. Instead, they use the cash for share payback schemes, super dividends or acquisitions that do not create value.

Although many companies see holding cash in offshores as a great hedge and asset protection, the real question indeed is how to spend this cash wisely. Internationalisation strategies should include not only the holding of the cash, but certainly also the spending on it. There are plenty of acquisition opportunities around for international companies to use as a stepping stone for getting into new business areas or new jurisdictions. A sound internationalisation strategy, proper due diligence, a good valuation and a seamless post merger integration are paramount to using this offshore cash to bring addition value to shareholders.