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Australian businesses should look to Asia and take advantage of M&A opportunities in the region, according to Simon Johnson, Pitcher Partners/Baker Tilly International director of transaction services .
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Opportunities for Australian businesses in Asia
29 September 2014
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Mr Johnson said research from UK financial software provider Dealogic shows the volume of M&A transactions globally reached AU$1.83 trillion in the first half of 2014, an increase of 41 per cent on the same time last year.
Appetite for domestic M&A is also increasing with Clayton Utz declaring in its Improved Levels of M&A Activity 2014 report that close to 80 per cent of last year’s deal volume has already been done so far this year.
Mr Johnson said this appetite has not yet extended to the M&A market in Asia, something he sees as a lost opportunity for Australian businesses.
“Australian companies, generally not aggressive in M&A transactions, have focused on core activities since the GFC. Research by Bureau van Dijk reports only 20 per cent of all cross-border M&A deals by Australian companies were in Asian nations. When assessing the value of these deals, the numbers drop to 13 per cent of deal value,” he said.
“There are plenty of M&A opportunities for Australian companies in Asia. Besides retail, food, manufacturing and human capital (professional services, engineers, research health), another key area is financial services, a sector in which Australia has a distinct advantage given our stable financial system.”
“Australian companies are gradually entering the M&A market with QBE Insurance acquiring Hong Kong-based Hang Seng General Insurance for $200 million in 2012, and Seek’s $523 million acquisition of Malaysian company JobStreet earlier this year.”
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“With many Asian countries open to Australian companies entering their market, it makes good sense for more Australian businesses to embark on M&A strategies in Asia. Whatever the reason for Australia business’s slow uptake, it’s clear they need to catch up in the M&A space in Asia,” Mr Johnson said.
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