Findings from a new global mergermarket survey commissioned by Mercer and Kroll found that 83% of respondents expect Asian cross-border acquisitions to increase in the next 18 months.
According to the "Asia on the Buy Side: The Key to Success" survey, Greater China is the most popular target market for future Asian-cross border M&A with 49% of respondents likely to make an acquisition in Greater China over the next 18 months. North America came in at second place, with 29% of respondents likely to undertake an acquisition there, while South East Asia, India and Australasia followed, with 27%, 22% and 15% respectively. On the other hand, less than 10% of respondents are planning to acquire in Africa (6%), the Middle East (6%), South America (5%), and Western Europe (3%). Japan is the least popular market for Asian buyers, with only 1% of respondents planning to acquire assets there.
While Asian firms are actively looking to expand their operations into unknown territories, they face a host of potential difficulties, from understanding local labor laws and legislative requirements to assessing the background, reputation and integrity of the target business and its intangible assets.
Only 40% of the Asian buyers surveyed viewed their most recent cross-border transaction as "very successful" or a "complete success."
According to the report, mainland Chinese respondents are likely to target the following regions in the next 18 months: Hong Kong, Taiwan & Macau (68%), North America (28%), India (24%), South East Asia (24%), Africa (8%), Australasia (8%), Eastern Europe & Russia (8%).
In India, companies are looking to the Americas. Target markets include North America (50%), South America (25%), Pakistan & Sri Lanka (25%), Africa (17%), Australasia (17%), Eastern Europe & Russia (17%), Greater China (17%), Middle East (17%), and Western Europe (8%).
Asian cross-border acquirers recognize the importance of HR-related issues with more than 80% believing that intangible assets and cultural differences are important factors to consider during a deal.
Of those respondents who have undertaken investigative due diligence on their most recent cross-border M&A, almost 82% report that their acquisition was ultimately very successful or a complete success.
In their most recent cross-border transaction, 47% of respondents who uncovered fraud at their target company did so post-close, causing them to renegotiate or exit.