STRATEGIC merger & acquisition (M&A) activity will be a key driver of the post-pandemic recovery right across the Asia Pacific region as companies aggressively move to acquire technology and skills while in some cases divesting to reduce their regulatory burdens.
That is according to a new report, Charting Growth: The New M&A Landscape in Asia Pacific, in which 800 senior executives across the Asia Pacific region were surveyed on their company and sector transactional outlook.
Executives across Asia Pacific are sending a clear signal that deal making will be integral to their renewal and growth strategies over the course of this year and into 2022 with 77% of respondents expecting M&A in their industry to increase in the year ahead, including 42% who say there will a major uptick in transactions.
In terms of industries, the tech sector was far and away the most bullish with more than three quarters (78%) predicting transactions would increase markedly over the next 12 months.
The Malaysian executives surveyed were broadly in line with their regional peers in their expectations for increased M&A activity. Out of the 50 respondents, 72% expect to see more activity with the majority of them (42%) expecting a significant increase in deal activities in the M&A space.
About 44% of Malaysian executives surveyed also identified accessing new markets as a driver for them. Expanding footprints across regional and global borders seemed to be important to our respondents generally with 40% of the entire group saying that the opportunity to move into new markets would be motivation for them to make acquisitions.
“While overall economic outlook does affect investor outlook, factors such as regulation and access to new markets (and therefore demand) will also shape the deal landscape,” commented Singapore-based Baker McKenzie Wong & Leow managing principal Andrew Martin.
“The power of financial investors, including private equity and venture capital, infra and credit funds as well as family offices will also inform the deal climate in the region.”
There is also more distressed investment opportunities expected across the region with 63% of consumer goods and retail companies citing obsolete sales and distribution models as the biggest driver of distress in that sector, for example.
Meanwhile, across every industry, regulatory enforcement is now expected to be one of the leading factors driving possible insolvencies. Interestingly, companies in Indonesia and Thailand are most worried about increased regulatory enforcement while companies in India are most concerned about new regulations coming in.
Half of all Malaysian respondents meanwhile identified tech disruptions as the likeliest driver of insolvencies in their sector. A significant number of participants also pointed to greater regulatory enforcement (44%) and ongoing economic and pandemic uncertainty (44%) as potential causes for companies failing to stay afloat. – June 15, 2021
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