Bangkok--16 Apr--Grant Thornton
New research from the Grant Thornton International Business Report (IBR) reveals that global M&A activity has risen from this time last year, however Thailand has fallen to the lowest level amongst all of the 44 countries surveyed.
The IBR data shows that 31% of all businesses globally expect to grow through M&A over the next three years, up from 28% in 2012. However Thailand, already the second lowest last year from the countries surveyed, has now fallen to the lowest, with only 8% of businesses reporting a plan to grow through acquisition in the next three years. This is significantly behind the ASEAN average of 21%.
Further emphasising general business pessimism in Thailand is the percentage of business leaders who anticipated a change in the ownership of their own business in the next three years. Only 5% of business leaders in Thailand anticipated this, the third lowest in the survey behind Armenia and Georgia. This is despite the fact that in other ASEAN countries this average was 14%, an increase of 5% since last year, revealing a more optimistic and acquisitive appetite.
Julaporn Namchaisiri, Managing Director of Corporate Finance at Grant Thornton in Thailand said, “These are disappointing figures. At best, companies are delaying their plans due to the current volatile political and economic activity in Thailand. At worst, companies are ambivalent about the opportunities created by the imminent ASEAN Economic Community (AEC) and the more aggressive attitude of businesses in our neighbours.”
Globally, dynamic businesses – the fastest growing, most agile companies in the survey – led the way. The results confirm that leaders of the world's most progressive businesses view acquisitions as an important means to supplement and boost their existing operations.
For example whilst 31% of all businesses globally expect to grow through M&A, the figure for dynamic businesses was 55%. It is a pattern repeated across all regions, for example 47% of all businesses in North America plan to grow through M&A, a ten percentage point rise from this time last year; but this rises to 71% for dynamic businesses. Across ASEAN, dynamic businesses (49%) are more than twice as likely to be looking at M&A as the total business average.
Mike Hughes, global leader for M&A at Grant Thornton, said, “The results are important. Firstly, the global increase in forecast M&A activity is another sign that the recovery is on a firmer footing and that the focus of businesses is moving away from simply staying afloat towards a growth agenda.”
“Secondly is how important M&A is to the fastest growing businesses in the world as they seek to access new markets and new pools of talent and technology to maintain their competitiveness.”
In another sign of how the global economy is changing as the developed world slowly recovers from the financial crisis, forecast M&A activity in emerging economies has dipped according to the IBR. Just 19% of businesses in the BRIC economies expect to grow through M&A over the next three years, down from 27% this time last year. ASEAN too declined by 2% in the last 12 months. By contrast the G7 M&A prospects have risen from 29% to 36% over the same period.
Khun Julaporn continued, “Businesses in emerging markets were barely affected by the financial crisis but more recently their growth has slowed markedly. This is exacerbating our situation in Thailand as the figures suggest that many businesses in the emerging economies are taking a pause in prioritising M&A activity. In contrast, many developed markets were previously operating in something of a holding pattern, waiting for signs that the recovery was sustainable and valuations realistic before making an acquisition.”
The full report, ‘Dynamic businesses at the forefront of M&A activity', is available via www.internationalbusinessreport.com.