Global Merger and Acquisitions Deals in Southeast Asia
Throughout 2020 and 2021, M&A deal-making has competed with globally disruptive events, most prominently the COVID-19 pandemic and Brexit. Between Brexit and the pandemic, major benchmarks for executives have been operational stability as well as organisational agility, in what has been a volatile business environment. As such, with the troubled economy and fouling predictions on future transactions, it seemed that M&A activity might be quietened in 2020 until markets perked up once more. However, amidst global change, M&A dealmakers have expanded, developed and grown with last year showing record-breaking transactions.
In fact, Southeast Asia has struck a few M&A deal blockbusters over the past few years, such as Wingetch’s takeover of Nexperia or Tata Motors acquisition of luxury brands Jaguar Land Rover; and this activity is predicted to accelerate in a post-pandemic business climate. In fact, there has been much confidence from executives in Southeast Asia (SEA) who are predicting Asia-Pacific will develop and grow to pre-pandemic levels as quickly as within the next three years. FinTech organisations, for example, are expected to become a target industry for cross-border M&A activity, especially amongst banks looking to reinforce assets with cyber-security or new payment platforms.
Even though, historically, M&As have been slow to develop in Asia when compared to other established markets like the US, renewed investor attractiveness to the region could be due to reimagining the competitiveness of emergent markets. But what makes the Asia-Pacific markets so attractive for growth opportunities? Below is what the research reveals.
Key trends in M&A across South East Asia (SEA)
1) The acceleration of change
Operational stability has been, for many, a key objective during the pandemic. As global vaccination programmes stimulate optimism across the globe, businesses have started to strategically reimagine the new normal. Businesses have faced the pandemic crisis with confidence, however, particularly across SEA, executives quickly redefined strategies, with many SEA economies opening more quickly than markets in the West earlier in the pandemic.
More generally, however, many future deals, whilst nearly impossible to predict with certainty, will likely be delayed as companies seek to increase their resilience and agility against the backdrop of change. This may shape products and services, as focus shifts to reinforce operational stability in the highest performing areas of a business.
2) Talent, capabilities and employment
The Future of Work conversation that has emerged during the pandemic, has been a major conversation across all sectors and global markets. The strategic opportunity to reinforce talent – including upskilling and reskilling – as well as acquiring new hires, and bolstering efficiencies with technology, will be critical investments during, and after, the pandemic.
C-Suite executives will likely prioritise the performance of their business in the “new normal” climate, and key talent will be instrumental in helping firms remain competitively relevant and operationally successful.
3) Strategic acquisitions
Many anticipate private transactions to increase as the value of assets and/or shareholdings decrease. As a result, deals may occur where irreparable economic damage has already harmed smaller companies. Many businesses across SEA have looked at their portfolios and have made strategic decisions on acquisitions to bolster their operations. Organic growth can seem insufficient when benchmarked to aggressive growth targets, which in turn has motivated the SEA market to acquire opportunities in wider industries and markets. As businesses look to strategize and expedite growth opportunities laterally into new markets, opportunistic thinking has become a gateway for business transformation, by acquiring new capabilities and/or technologies. The likelihood of deals in the “new normal”, therefore, remains strong and will likely see transactions that are both strategic and opportunistic.
We’re here to help
Helping companies navigate uncertainty can be quite the task. Fortunately, IRIS FMP specialises in M&A activity, especially when it comes to harmonizing and prioritising your talent and advising on the intricate legislative requirements in-country. For more information, speak to our team today.