Asset Valuation is Greatest Pain Point for Asia-Pacific M&A Professionals

Asset valuation will be the greatest pain point on successfully completing deals over the coming 12 months, say Asia Pacific M&A professionals.

Respondents to a new survey from Intralinks Holdings, Inc. believe deal valuation represents a greater challenge to the deal process than other factors such as shareholder activism against underperforming companies, or political interference.

"A few prime examples include Singaporean agribusiness firm Wilmar's current bid to takeover Australian food processor Goodman Fielder, and the recent takeover bids for premium Australian department store David Jones," said Matt Porzio, vice president of M&A strategy and product marketing at Intralinks.

The survey also revealed that on a global level, 67 percent of dealmakers indicated they are optimistic about the current deal environment in comparison to the previous six months, while for APAC in particular a slightly lower 65 percent of dealmakers claimed they are positive about the current deal landscape.

Interestingly, the Intralinks Global Sentiment Survey also uncovered that 80 percent of dealmakers in APAC predict that deal volume will increase over the next six months (compared with 77 percent globally), and 68 percent said they do not expect a change in political interference in M&A activity over the next 12 months.

"The global M&A market is continuing to exhibit higher levels of activity than in 2013, maintaining optimism among dealmakers," added Porzio.

The Global Sentiment Survey results for APAC shows that more than half or 63 percent of dealmakers expect to participate in more M&A deals than six months ago; and 56 percent expect shareholder activism will continue to increase.

The industry with the most M&A activity according to dealmakers is energy and power.

Increase in early-stage global M&A activity

Intralinks also released the latest Intralinks Deal Flow Indicator  (DFI), a predictor of future mergers and acquisitions (M&A) activity.

The latest data, compiled through the end of June 2014, shows 16 percent quarter-on-quarter (QoQ) and 12 percent year-on-year (YoY) increases in early-stage global M&A activity, with particularly strong performances in Europe, Middle East and Africa (EMEA) and North America.

Overall, this quarter's results point to sustained momentum in M&A activity through the end of 2014, building on the strong levels of M&A activity seen in the last year.

Intralinks is predicting that global announced M&A volumes for 2014 as a whole will, for the first time since 2010, show an annual increase of between six and 10 percent compared to 2013.

Deal activity level in the APAC region however remain volatile, down 15 percent YoY and QoQ. While Japan is quite strong, China, one of the largest investors in the region, continues its economic realignment which is decelerating overseas acquisitions, and is having a notable affect in Australia and beyond.

"A good lending environment with high quality assets and companies for sale are driving this growth. Deal volume continues to go up and we expect to see a good number of high profile deal announcements through the end of 2014," said Porzio.

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