The report – Global dealmakers: Cross-border M&A outlook 2019 – anticipates a 54 per cent upswing in M&A activity in the year ahead based on a survey of 150 global dealmakers.
A further 71 per cent of that group said they would be focusing on cross-border investments as they seek new markets and operational centres in response to the rising tide of protectionism that has grown out of the US-China trade war.
“We are seeing strong interest among buyers despite the geopolitical turbulence in almost every corner of the globe, and respondents believe this will continue into the year ahead,” said Michael Sonego, Baker Tilly corporate finance lead.
“We particularly see strong forecasts for an increase in cross-border investments which are more complex, but also potentially offer safeguards for businesses at a time of disruption.”
Key markets for respondents were Southeast Asia and North America, but for wildly different reasons.
“North America is a large economy with a proven, captive population who [demands] quality goods and services,” Mr Sonego said.
“If you can break into that market, you have a strong population of consumers who [is] known to buy, and M&A is a well-understood entry option to the market.”
“For Southeast Asia, the opportunity lies in the emergence of middle-class consumers and wealth — new markets opening up with people who might not have previously been able to access your goods but who have growing and sustained demand.
Cross-border M&A comes with a host of unique challenges.
Respondents believed that regulation would prove the greatest challenge in future cross-border M&A (81 per cent), with macro-economic and geopolitical uncertainties a close second (71 per cent).
The main area of activity is anticipated to be mid-market dealmaking (deals valued between $US15 million and $US500 million) by 67 per cent of respondents.
“There are clearly challenges being faced due to the lack of certainty around the globe, but rather than inhibiting activity, it has in many ways become a driver of activity… there’s a growing sense the disruption is the new normal” Mr Sonego said.
“For some buyers that might mean wanting to wait on the sidelines, but for many others it has prompted deal activity as people try to manoeuvre around the challenges.”
