The Future of Mergers and Acquisitions in APAC

The reality is that both the level of M&A activity and the business focus for dealmakers across the Asia Pacific region is in transition.

FREMONT, CA: Dealmakers throughout the Asia-Pacific region are transitioning in terms of both the volume of M&A activity and their business priorities. There are major changes taking place in every facet of mergers and acquisitions in the area. Even when comparing Q1 to Q2, then into July and August of this year, the importance of these changes in 2022 is growing on a monthly basis.

M&A activity increased significantly globally in 2021. M&A transactions increased by more than 20 per cent in the Asia-Pacific region compared to 2020. This increase did not indicate any appreciable impact from the COVID-19 pandemic's outbreak. This can be partly related to the numerous trades that were already underway before its introduction. There were more transactions overall in 2021 than there were before the pandemic. The average deal value increased significantly in size overall, which is noteworthy. Deals involving AP climbed by roughly 40 per cent from 2020 to 2021.

The primary deal drivers of the AP M&A market often come from the purchase side, and the majority of AP buyers are headquartered in the Asia-Pacific region. This has turned out to be advantageous for Asian businesses. Geographic proximity is advantageous in the deal-purchasing process because a successful merger and acquisition depend on factors like social, cultural, and linguistic compatibility. To find potential targets within their home nations and establish fruitful pre-deal interactions with individuals working for these businesses, AP-based buyers have an advantage.

M&A is being used by corporations in the Asia Pacific to restructure their industries. There is a growing demand for AP enterprises, which represent a diverse cross-section of industry sectors, to adapt their operations to stay up with the significant business transitions or changes taking place in the AP region.

The entry requirements for startups have recently been lowered because of advancements in electronic and internet communication technology. The inability of these small businesses to expand due to a lack of brand recognition and human resources has made them attractive acquisition targets for market leaders. The pandemic has given young, digitally adept businesses an advantage, therefore larger, more established AP firms are under more pressure than ever to invest in assets that will hasten their digital transformation.