A new global mergermarket survey of senior M&A professionals, commissioned by Intralinks, a leading provider of critical information exchange solutions, has found that cross-border M&A deals involving companies in emerging markets will outpace activity in the developed markets over the next 12 months.
Nearly three quarters of overall respondents expect cross-border M&A activity to increase in emerging markets due to inbound and outbound investment from both developed and emerging markets. China, Brazil and India are viewed as the top three emerging markets offering the most attractive M&A opportunities despite not having a clear regulatory framework and the difficulty in performing due diligence, which are rated as the primary concerns when acquiring a target in an emerging foreign country or region.
- Overall M&A activity: The majority of respondents expect M&A deal activity to increase. Leading the optimism is Latin America (71 percent), closely followed by Asia-Pacific (APAC) (64 percent) and North America (55 percent). However, Europe, Middle East and Africa (EMEA) is slightly more neutral with 24 percent predicting an uptick, with the majority citing that M&A activity will either remain the same (48 percent) or decrease (28 percent)
- Biggest buy-side challenges: Two thirds of overall respondents say transparency and lack of information is the biggest challenge to buy-side due diligence
- Sell-side challenges: Respondents identified managing bidders and their offers, security, and confidentiality agreement response tracking as similarly challenging issues
- Private equity deals: The majority of respondents expect private equity deals to increase and will be integral in fuelling overall M&A activity. Latin America is the most positive (71 percent), followed by North America (54 percent) and APAC (48 percent). EMEA respondents are less optimistic with a third of respondents expecting a decrease
- Industry sectors: Energy (39 percent), financial services (33 percent), and the industrials (30 percent) sectors are the consensus top industries where respondents expect M&A deals to occur. Technology (19 percent) and life sciences (18 percent) are seen as the least likely industries for M&A deal activity
- Access to technology: The leading key driver identified by respondents for investing in developed markets was access to technology (49 percent). With any strategy involving emerging markets, respondents say, technology is important to success and long-term growth
“The majority of respondents say transparency is the biggest challenge to buy-side due diligence, particularly in an ever increasing market of cross-border M&A activity,” said Matt Porzio, vice president of strategic transactions, Intralinks. “However, by using cloud-based solutions, such as Intralinks, transparency of information can be increased enabling users to efficiently accelerate their M&A deals as buyers and sellers continue to collaborate over multiple continents and time zones. Additionally, with the advances in mobile applications and the increasing adoption of online Q&A tools, buyer questions and information requests can be efficiently handled by the sell-side teams.”
The full survey is available at:http://www.intralinks.com/sites/default/files/file_attach/intralinks_global_ma_report.pdf
Conducted in September and October of 2011, Intralinks engaged Remark, the research and publications arm of The Mergermarket Group to canvass the opinions of 160 senior M&A practitioners from the corporate, financial and legal advisory and private equity community across the globe. Respondents were drawn equally from Asia-Pacific, Europe, Latin America and North America and were asked to provide their insight on a number of extant issues in the current global M&A market.