The Impact of M&A on APAC Companies

As APAC CEOs look to reimagine their companies, they are leveraging M&A to accelerate their transformation.

FREMONT, CA: There is rising demand for APAC CEOs in all sectors to restructure their companies to keep up with the pace of changing customer tastes, digital disruption, and environmental, social, and governance (ESG) concerns. The TMT (technology, media, and telecommunications), consumer, and AMM (advanced manufacturing and mobility) sectors are those where this pressure is the greatest. In comparison to other regions, the Asia-Pacific region has more family-run conglomerates.

To maximise shareholder value, reallocate capital, and position the company for future growth, more businesses are becoming aware of the benefits of partial or complete divestitures and taking advantage of them. Whereas divestment was originally viewed as a weakness, many leaders now acknowledge that there are instances when selling their businesses is an optimum way to advance from a local business to a worldwide player.

Executives in the Asia-Pacific region are shifting their perspectives and taking a longer-term look at the prospects that a merger can have for the business. This could be done through integration, carve-outs, or a radical acquisition that completely reimagines the company. Despite the ongoing COVID-19 pandemic and geopolitical difficulties, consistently high valuations across the Asia-Pacific region are a clear indication of ongoing investor confidence.

In addition to looking internationally, Asia-Pacific CEOs are improving their digital, product, and service capabilities across industries. Sixty per cent of technology acquisitions took place outside the technology sector. Asia-Pacific businesses, regardless of industry, are attempting to transform into technology firms to stay up with rising consumer demand and regional expansion in digital capabilities.

In Vietnam and Indonesia, the proportion of the population with access to mobile devices is expanding quickly. For instance, almost 176 million Indonesians had mobile device internet connection in 2020. This number is projected to increase to over 233 million by 2026. While all industries compete for technology assets, businesses are going above and beyond to obtain priceless raw materials for the production of chips and electronic goods. At the same time, they are making calculated bets that help other industries, like AMM, prosper.  The digital economy in Southeast Asia, and specifically e-commerce, is expanding at an exponential rate. Asia-Pacific businesses want a piece of this expanding market, but they lack the digital skills to do so.

The AMM industry has been concentrating on gaining technological capabilities that will enable it to speed up innovation in autonomous driving, particularly mobility firms. Companies in the transportation subsector earned deal values of USD 55 billion, a 29 per cent increase from the previous year. Companies are looking for technology assets in the consumer market that can help them boost their supply networks, value chains, and customer experiences.

Check Out This : Transportation Review 

Asia-Pacific CEOs are contemplating both the challenges and opportunities due to the growing effects of climate change and the push from consumers, society, and governments to practise good corporate citizenship regarding ESG. Nearly three-quarters of Asia-Pacific CEOs believe that ESG will be a more significant driver of value over the coming years, while about one-quarter (26 per cent) believe that M&A offers a crucial avenue to raising ESG scores, which they need to attract investors.