The survey respondents included 60 directors, managing directors and partners from leading M&A-focused investment banks and law firms based across Asia. Of them, 88% were bullish about deal activity in Asia over the next 12 months. Almost a quarter even expect the M&A market to increase by more than 20%. The majority of respondents predict China (60%) and India (37%) will see the greatest year-on-year growth, while Korea was picked by merely 3%.
"Regionally, both financial services and IT services look set to lead the sector activity. Asian companies are also playing an ever-growing role in the global M&A market. We have seen from the IntraLinks Monitor: Tracking the European M&A Market that Asian corporates are expected to be a bigger factor in European deals than US private equity houses. As Asian participants grow in maturity and depth, this trend can only continue,ö says Rob Fisher, managing director, Europe and Asia, for IntraLinks.
As Fisher notes, financial services are expected to lead activity (50%). Another trend: nearly one third of respondents (31%) consider a consolidation in the pharmaceuticals & healthcare sector very likely, given the lower manufacturing and R&D cost bases in Asian countries.
Not surprisingly, transparency of information (72%) and access to information (53%) are considered the most significant challenges on the buyside of transactions. The other bugbear was regulatory or legal barriers, which were mentioned by 44% of respondents.
On the sellside, managing corporate expectations (57%) was identified as the greatest challenge. The M&A experts also pointed at geographical and logistical problems (35%) as well as the confidentiality of documentation (35%) as a potential issue when conducting auctions and sale mandates. As one survey respondent noted: ôTackling multiple bidders is a major challengeö.