Business / Economy

M&A plans limited over next 3 years

By Hu Yuanyuan (China Daily) Updated: 2014-04-11 07:07

"As global markets recover from the downturn, Chinese businesses are being more rational over cross-border transactions compared with the last two years, when they were rushing out to buy on the dips," said Xu.

Meanwhile, the recovering economy and more fluidity in debt and equity markets will lead to an increasing appetite to exit among those who have been holding assets through the economic downturn.

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The exit activity of businesses through M&A is increasing globally, with 11 percent of business owners expecting to sell up in the next three years, higher than last year by 3 percentage points.

Businesses from Australia are much more upbeat about the potential to sell than last year, rising by 10 percentage points in number. Australian businesses are more inclined to sell to management. A total of 25 percent expect to exit via private equity and 22 percent would like to undertake a transaction with a trade buyer, the survey showed.

When Chinese businesses' appetite for overseas M&A weakens, the desire of global businesses for cross-border acquisitions increases.

The survey showed that 31 percent of the businesses globally expect to grow through M&As over the next three years, up from 28 percent last year, suggesting the recovery is on a firmer footing and the focus of businesses is moving away from simply staying afloat toward a growth agenda.

As the developed economies slowly recover from the financial crisis, there is an evident increase in M&A expectations, said Xu.

The M&A expectation of businesses across the G7 group of economies climbed to 36 percent from 29 percent last year. However, the emerging economies see a weaker M&A expectation given the slowing down of economic growth. The M&A prospects of BRIC nations (Brazil, Russia, India and China) dropped by 8 percentage points from last year to 19 percent, the survey showed.

Looking at business sector numbers, professional services are most likely to grow through acquisitions in the next three years with 47 percent of the enterprises having such a plan.

Other sectors, including mining and quarrying, financial services, agriculture, hunting, forestry, fishing and technology, also boasted relatively high M&A expectations, according to the survey.