Asia-Pacific M&A activity is set to pick up in 2017, with nearly half of Asia-Pacific executives (47%) to pursue deals in the next 12 months in a low growth market environment as companies look to consolidate and look for inorganic growth options, according to EY’s 15th Global Capital Confidence Barometer.
Larger pipelines and bigger deals are on the horizon with 68% expecting to complete three or more deals in the next 12 months, with innovation and technology as key strategic drivers for deals.
Optimism in APAC for deal-making
The report shows that 41% APAC executives (versus 19% from six months ago) expect the local M&A market to improve over the next 12 months, globally only 29% of executives responded in the same way.
A majority (75%) of APAC companies (versus 49% globally) have five or more deals in the pipeline, and 10% (versus 5% globally) are planning deal sizes of US$1b or more.
Top investment destinations
In terms of where APAC companies are looking to invest, China remains the top target destination within the region, followed by Japan, the US, Australia and India.
Given the concerns raised by Brexit, the UK has fallen off the list of top destinations but Asian companies with strong outbound appetite could be well-positioned to take advantage of uncertainties in Europe.
Top sectors with the highest acquisition appetite include mining and metals; oil and gas; telecommunications; financial services; diversified industrial products; and retail and consumer products.
The report also revealed that 91% of APAC companies are using big data and analytics as part of their deal process. These executives also recognize the value of analytics in their diligence process to better assess target companies.