CFO Beat
  • Accounting & Tax
  • Credit & Capital
  • GRC
  • Strategy
  • Technology
  • HR
No Result
View All Result
CFO Beat
  • Accounting & Tax
  • Credit & Capital
  • GRC
  • Strategy
  • Technology
  • HR
No Result
View All Result
CFO Beat
No Result
View All Result
Bullish M&A Sentiment Buoyed by Economic Confidence

Bullish M&A Sentiment Buoyed by Economic Confidence

April 29, 2019
Post on LinkedinShare on TwitterShare on Facebook

The mergers and acquisitions (M&A) appetite in the Asia-Pacific region has risen despite geopolitical challenges and some economists predicting slower economic growth, according to the Asia-Pacific edition of the 20th EY Global Capital Confidence Barometer (CCB), a biannual survey of more than 2,900 executives from 47 countries.

Positive economic fundamentals buoy M&A sentiment

More than half (51%) of corporate executives in the region indicate they plan to acquire in the next 12 months, an increase from 45% six months ago, and significantly above the 10-year historical average of 42% for the region since inception of the study in 2009. Executives in the region are also bullish on where the M&A market is headed, with 84% expecting the M&A market to improve in the next 12 months — a jump from 53% two years ago.

Executives’ optimism in their pursuit of M&A is underpinned by their positive economic outlook, globally and within the region. Ninety-three percent see the global economy as improving; 87% see the economy in the Asia-Pacific region improving. Similarly, 87% of executives think the region’s economy is improving, an increase from 62% a year ago.

The improving economic optimism among Asia-Pacific executives is reflected in the optimistic assessments of their own future performance: 68% of respondents expect revenue growth of between 6% and 15% in the next year. 

Harsha Basnayake, EY Asia-Pacific Transaction Advisory Services Leader, says:

“Against a backdrop of economic and fiscal policy decoupling, technology-fuelled transformation and geopolitical trade uncertainty, executives in Asia-Pacific are opting to proactively manage challenges and seize the upside opportunities of disruption. Businesses are laser-focused on growth and the opportunity to grow businesses and consolidate scale in Asia-Pacific is the number one priority for the majority of executives.”

More regular assessments and reshaping of portfolios creating buy-sell activity 

Reflecting the drive to proactively manage risks and create growth opportunities, almost two-thirds (57%) of executives in the region are now reviewing their portfolios quarterly – significantly more than the 23% who did so in October 2018. 

By speeding up the frequency of their portfolio reviews, Asia-Pacific companies are better positioning themselves to identify capital recycling opportunities. These include identifying assets to divest and reshaping capital allocation across portfolios, which were cited by Asia-Pacific executives as the top actions taken after their most recent portfolio review.

Shareholder activists are also playing a key role in more regular portfolio reviews with the majority of Asia-Pacific executives (79%) compelled by activist pressure to continually reshape their portfolios. More than half of Asia-Pacific executives say that activist shareholders are compelling them to make acquisitions to drive value creation, with more pressure to acquire exerted on them than on their global counterparts.

Basnayake says: “Corporate executives in the region are proactively reshaping their portfolios with accelerated regularity and more discipline to identify capital allocation opportunities. As well as driving acquisition appetite, this is also supporting a growing recognition of the importance of identifying non-core or underperforming assets and taking action to divest them in a timely manner. Asia-Pacific companies increasingly see portfolio reviews as part of a broader capital recycling strategy.”

Looking for growth – across borders and sectors

The top three most popular sectors to pursue acquisitions for Asia-Pacific executives over the next 12 months are automotive and transportation (72% of executives in that sector plan to acquire), technology (61%) and financial services (59%). These industries are all highly disrupted by technological change, with companies in these sectors turning to M&A to keep pace with customer demands, offer innovative products or stay competitive via new business models. 

Corporate executives in the Asia-Pacific region are also on the lookout for the right M&A opportunity abroad as well as at home – 72% say they will pursue cross-border M&A over the next 12 months, a slightly higher percentage than global executives (67%). Executives find overseas assets increasingly attractive and five top investment destinations for Asia-Pacific companies are China, Australia, Japan, India and the United States.

Although Asia-Pacific executives favor a more bullish view on the M&A market and economic outlook, they are mindful of the risks, with 33% citing the risk of an economic slowdown as the primary threat to their growth plans.

Basnayake says: “There is no doubt that the outcome of trade tensions will have significant implications to markets in the Asia-Pacific region and for businesses that look to this region for growth. However, many executives in the region are increasingly confident in their growth opportunities and achieving scale through mergers and acquisitions is on their agenda. Given acknowledged risks, proceeding with caution will be a route for some companies, but the majority are looking to proactively reshape themselves for future growth in a changing market.

Strong revenue performance outlook and rising economic confidence, together with the need to reshape portfolios for future growth create strong foundations for a healthy M&A market.”

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Latest Articles

Data Catalogs Essential for Data Governance and Insights but Under Deployed

Data Catalogs Essential for Data Governance and Insights but Under Deployed

August 6, 2019

Emailage and Featurespace Partner to Tackle Application Fraud

August 5, 2019

Olin Announces $100 Million Accelerated Share Repurchase

August 5, 2019

Microchip Enters Memory Infrastructure Market

August 5, 2019

Combatting Future Security Threats of Quantum Computing

August 5, 2019

Loparex Acquired by Pamplona Capital Management

August 5, 2019
Advertisement BannerAdvertisement BannerAdvertisement Banner

Editor's Picks

Combatting Future Security Threats of Quantum Computing

August 5, 2019

Loparex Acquired by Pamplona Capital Management

August 5, 2019

Unisys to Exchange Approximately $130 Million of Convertible Notes for Stock and Cash

August 2, 2019

Analytics and Data-driven Culture Help Companies Outperform Business Goals

August 1, 2019

Automation Fears are Real: AI Will Affect One in Every Five Jobs in Asia–Eliminating One in Eight

August 1, 2019

Supply Chain Visibility Builds Trust With Consumers

August 1, 2019

American Businesses Are Fixing Healthcare

July 17, 2019

Stay Connected!

Subscribe to CFO Beat

  • Please choose the newsletters you would like to subscribe to.
  • Please enter your work email
LinkedIn Twitter

About Us

  • About Us
  • Contact Us
  • Subscribe
  • Contribute
  • Privacy Policy
  • Terms of Use

Topics

  • Accounting & Tax
  • Credit & Capital Markets
  • Risk & Compliance
  • Strategy
  • Technology
  • Human Capital

Business Beat Media Network:

  • CIO Beat
  • Global Trade Beat
  • Manufacturing Beat
  • Supply Chain Beat
  • Utility Beat

© 2019 Business Beat Media, LLC. All Rights Reserved.

No Result
View All Result
  • Accounting & Tax
  • Credit & Capital Markets
  • Governance, Risk & Compliance
  • Strategy
  • Technology
  • Human Capital
  • About Us
  • Privacy Policy
  • Terms of Use

© 2019 Business Beat Media, LLC. All Rights Reserved.

This site uses cookies. To see how cookies are used, please review our privacy policy. If you agree to our use of cookies, please continue to use our site. Find out more.