A new direction for global M&A
We’ve been tracking a new trend in global M&A: buyers from emerging markets looking for deals in developed ones – and there are more than a few. In 2012, companies from high growth, emerging markets invested over US$32.6 billion in mature market targets, more than deal flow in the other direction, and almost three times their 2005 investments. So what does this trend mean for deal-makers? Buyers and sellers unfamiliar with one another’s processes, corporate and cultural context may need to go the extra mile to make deals happen but we believe that the growth and investment opportunities to be had make it very worthwhile.
We've identified how the emerging to mature market dynamic can affect deal-making. So how can you improve your chances of making a good deal happen?
Emerging markets buyers: why they invest
For this report, PwC carried out an assessment of deals between high growth market buyers and developed market sellers over the last seven years. We interviewed senior deal-makers in high growth market companies who have bought businesses in developed markets to understand their rationale, concerns and their views of developed market investment opportunities ahead. From the emergence of privately owned Chinese companies as international investors and Indian companies going global, to the shifting patterns of outbound M&A by Russian and Brazilian firms and from the Gulf Region, no developed market seller can afford not to know what these buyers want.
Getting to grips with a new deal dynamic
The report also draws on the experience of our own global network of PwC Deals teams for considerations on what both buyers and sellers need to factor in to make these deals happen. Differences in valuations, processes, decision-making, and completion timeframes come to the fore, with considerable variations across markets. A clear message from our M&A experts was that there really is no “one size fits all” approach to deals with emerging market buyers. Understanding the rationale, mind set and the commercial, as well as cultural, context of the buyer requires a team with a mixture of local knowledge and international deal-making experience.
Ready to reset your compass?
As figures in this report highlight, the direction of deal flow between emerging and developed markets is shifting – and the competition for investment is heating up. For those of you who want to get a head start, this report will be a guide to how to make the most of the opportunities emerging market investors can offer. If you are ready to reset your deal compass, you may have a lot to gain.