When Mr Price announced its R9.24bn acquisition of German apparel and homeware retailer NKD in December, the market’s response was swift and sceptical. Shareholders reacted negatively to the deal and the retailer subsequently lost more in market capitalisation than the value of the acquisition itself.The acquisition marked Mr Price’s entry into Europe and its largest acquisition in 40 years. It also reflects a broader trend among firms across Sub-Saharan Africa, which are increasingly pursuing cross-border acquisitions to access new markets and resources while diversifying risk. Outbound mergers and acquisitions from the region surged 61.6% year on year in 2025, reaching a four-year high of $8.1bn.However, international expansion does not always deliver the expected rewards. South African investors need only look at Woolworths’ costly investment in Australia’s David Jones to understand the risks involved.Acquisitions in advanced economies such as Germany, Australia or the US expose South African firms to unfamiliar regulatory, cultural and competitive environments. Managers may have motives and risk preferences that differ from those of shareholders, a phenomenon commonly referred to as the agency problem.This is where corporate governance becomes critical. Strong corporate governance mechanisms help ensure that big strategic decisions are subjected to appropriate oversight, transparency and accountability. They can also help companies navigate the complexities that come with operating in unfamiliar markets and improve the likelihood of creating value through international expansion.To better understand what drives successful cross-border acquisitions by African firms, our recent research included interviewing 24 senior decision-makers at institutional investors across South Africa, Mauritius, Botswana, Zambia, Nigeria and Ghana, covering representatives of pension funds, insurers, private equity and asset managers. We analysed control levels in 261 cross-border acquisitions by listed firms across five Sub-Saharan African countries and examined the market reaction to 142 acquisitions undertaken by JSE-listed companies in 2010-22. Strong corporate governance mechanisms help ensure that big strategic decisions are subjected to appropriate oversight, transparency and accountability.Our findings show that, on average, cross-border acquisitions generate positive returns for shareholders of JSE-listed firms. Two corporate governance mechanisms consistently emerged as important contributors to successful outcomes. Institutional investors and a diverse board of directors were identified as effective corporate governance mechanisms that can enhance the success of African firms abroad.Institutional investors, particularly those based in South Africa, play a monitoring role and are increasingly engaging in shareholder activism to influence corporate governance regarding the international expansion of investee companies.The reaction to Mr Price’s acquisition of NKD illustrates this trend. Big South African asset managers, including 36ONE Asset Management and Benguela Global Fund Managers, publicly criticised the retailer for what they viewed as insufficient shareholder involvement in the decision-making process. Their concerns centred on the target’s high valuation relative to its historical financial performance, as well as whether the capital expenditure required for integration and future growth had been fully considered.In response, Mr Price released additional details on its strategic rationale, business plan and due diligence process. This demonstrates how institutional investors can encourage greater transparency and accountability about big strategic decisions.A second important governance mechanism is board diversity. Complex and uncertain decisions, such as international expansion, benefit from a wide range of perspectives, skills and experiences. Yet South African boardrooms still require meaningful transformation and often do not reflect the country’s demographic diversity.Our analysis showed that shareholder returns were generally higher when boards were more diverse, particularly in transactions involving cultural and regulatory differences between countries, such as those between South Africa and Germany. The positive effect was especially evident where boards had greater female representation and a lower average age.These findings suggest that board diversity is not simply a matter of representation or compliance. It can also be a driver of shareholder value. The institutional investors we interviewed reinforced this view, highlighting the importance of incorporating local expertise into decision-making. Directors and executives with knowledge of the host-country environment can help firms navigate unfamiliar markets and avoid costly mistakes.Mr Price appears to recognise this reality. The company has emphasised the importance of retaining NKD’s German management team rather than attempting to manage the business solely from South Africa. Preserving local knowledge and cultural understanding can provide valuable insight during integration and future growth while bringing a wider range of perspectives to decision-making.As more South African companies look beyond the continent for growth opportunities, corporate governance will become increasingly important. Our research suggests that stronger shareholder oversight and greater board diversity can help firms navigate the complexities of unfamiliar advanced economies and improve the prospects of creating value abroad.In the case of Mr Price, earlier and more transparent engagement with key institutional investors may have softened the negative market reaction. For companies considering similar expansion strategies, that may be one of the most important lessons of all.• Anderhofstadt is a PhD student, and Wesson a professor in finance and accounting, at Stellenbosch Business School. Viviers is a professor at Stellenbosch University’s department of business management.