Download the report
The case for Value Creation as the priority
Close to half of deals analysed in Asia Pacific have destroyed value and/or underperformed their industry peers, based on Total Shareholder Returns (TSR). Dealmakers are under more pressure than ever before to deliver value in a time of disruption.
Deal volumes in Asia Pacific are growing in significance, with the region’s share of global Mergers and Acquisitions (M&A) continuing to increase over time, buoyed by sizable Private Equity (PE) dry-powder of ~USD$600+ billion.
However, the region is not without its market challenges: high inflation, elongated impacts of the pandemic, unique territory nuances, and increased regulatory scrutiny are driving highly variable returns.
In addition, executing deals in Asia Pacific is becoming more complex - they are often cross-region, with fragmented data quality, differing stakeholder needs, and variable sector maturities.
Asia Pacific is a fast growing region where markets have seen less consolidation and companies are typically less mature - there are disproportionately more ways to bring a Value Creation lens because of the degrees of transition and transformation happening across the region.
Value Creation in Asia Pacific: an evolution
It is clear a new approach is needed - (re)enter Value Creation. Put simply we define Value Creation as:
We know success today depends on structure, discipline and comprehensiveness - and consideration of the full suite of value drivers, not simply traditional elements of financial engineering and tactical synergies focused on cash flow. The better approach considers strategy, operations, tax and stakeholder alignment which together drive premiums and manage risks along the ‘Value Bridge’.
What’s next for dealmakers in Asia Pacific?
Asia Pacific remains the ‘sweet spot’ for global growth due to a range of factors - including burgeoning intergenerational wealth transfers, accelerated sector modernisations, growing intra-Asian trade flows and a nascent focus on Environment, Social and Governance (ESG) - which together present compelling Value Creation opportunities.
We are seeing many deal thematics emerge recently including ‘roll-ups’ in fragmented markets to build scale, carve-outs for large family businesses relevant to wealth transfer events, transacting as a catalyst to transform and innovate, and partial trade-sales and stakes to fund strategic expansions - particularly within Southeast Asia to manage regional political and supply chain tensions.
To activate these, we suggest six pragmatic responses for dealmakers to successfully drive Value Creation catering to Asia Pacific’s nuances:
Embed Value Creation early and do so holistically
Focus on capabilities that drive long-term, sustainable premiums
Commit time and effort to understand different cultures, business and market practices to shape people strategy
Continually uncover value from data and do so early
Use ESG to elevate premiums
Invest appropriately in integration to de-risk execution
Richard Skinner
Partner, Asia Pacific Deals Strategy & Operations Leader, Singapore, PwC Singapore
Director, Strategy& (Asia Pacific Strategy), PwC Singapore
Anna Sargeant
Catriona Lim
Associate Director, Asia Pacific Deals, PwC Hong Kong
Louise Garrett-Evans
Raymund Chao
PwC Asia Pacific and China Chairman, PwC China
Christopher Kelkar
PwC Asia Pacific Vice Chairman, Operations, PwC United States
Sridharan Nair
David Brown
Asia Pacific Deals Leader, Global Corporate Finance Leader, Partner, PwC Hong Kong
Global, EMEA and Spain Deals Leader, Partner, PwC Spain
Hein Marais
Rob Silverwood
Australia Deals Leader, PwC Australia
Mainland China and Hong Kong Managing Partner - Deals, PwC China
+[86] (10) 6533 2199, +[852] 2289 2199
Dinesh Arora
Partner & Co-Leader, Deals, PwC India
Michael Goenawan
Chief Executive Officer, PwC Advisory LLC
Dae-Joon Park
Mary Jade Roxas
Markets Leader, PwC Philippines
Ling Tok Hong
Jason Liu
Chantanuch Chotikapanich
Johnathan Ooi Siew Loke
Bhavin Shah
Partner & Co-Leader, Deals, Mumbai, PwC India