2015 saw the peak of Taiwan-targeted deal volume in recent years with a total of $15.9 billion.
From 2016 onwards, the volume of deals remained stable despite an increasing number of deals.
Amid the ongoing China-US trade war and concerns of a global recession, investment sentiment weakened, and this is reflected by the sharp decline in deal count and volume for both Taiwan targeted and outbound transactions.
The number of Taiwan-targeted deals in 2019 decreased by 42% when compared with the same period last year; the total volume fell to $2.5 billionn, the lowest volume since 2004.
Last year’s $1.6 billion leveraged buyout of LCY Chemical by KKR sparked hope for more sponsor deals of similar size and nature. However, as of this month, deals over $500 million have yet to appear and it seems unlikely that the annual deal volume would surpass that of 2018s.
Lack of deals across all sectors
The backbone of Taiwan’s deal volume has been the semiconductor and electronics industries.
As an export-oriented economy, both industries have played a large role in Taiwan’s growing M&A volume. From 2015 to 2017, technology sector’s share in M&A volume played a lessor role, showing a gradual decline.
In 2019, while the total deal volume shows a sharp decrease, technology M&A volume remains at similar level with last year at 34%. Therefore, the drop in M&A activity is seen across different industries of Taiwan, reflecting the down turning outlook of the economy.
As Taiwan has close trade ties with China and other Asian countries, the shock of the trade war would not just affect Taiwan’s M&A activity, but its trading partners as well.