Cross-boarder M&A outlook for 2019
The growing complexity of doing business means owners and managers are faced with a key decision. Do they wait for certainty — but risk their business stagnating or being overtaken during the delay — or do they invest in strategic acquisitions to grow and meet the needs of their clients?
The question leads us to seek input from dealmakers globally on business intentions in the current environment.
The latest Baker Tilly International research report Global dealmakers: Cross-border M&A outlook 2019 explores this question identifying current trends and challenges shaping the global business market for mergers and acquisitions.
It also details opportunity areas and the key global markets for growth activity and where dealmakers are likely to find value in the year ahead.
Produced by our global network, Baker Tilly International and M&A intelligence provider Mergermarket it is an essential read for professionals in the field of mergers and acquisitions.
Key M&A findings from 150 global dealmakers:
- 54% say M&A activity will increase through the rest of 2019 and beyond.
- 71% say they will focus on cross-border investments, mainly as they seek out new markets and centers for their operations.
- Southeast Asia and North America are among the top investment destinations, although large numbers of respondents will remain focused on their home markets
- While geopolitical events and economic uncertainty create concerns globally, dealmakers remain positive on their ability to get deals done and many anticipate an uptick to the ongoing rush of M&A transactions.
- 35% of respondents believe cross-border M&A is a risk worth taking
- 49% expect to see increasing competition for assets in the year ahead
- Competition will be led by private equity and other funds (41%) and corporate buyers consolidating within their main industries (37%)
- The US is the top market where dealmakers will invest in the next 1-2 years
- TMT (77%) and consumer (61%) are top sectors of interest
Specific countries where investment will be for the next 2 years (Top 10 countries)
Concerns for M&A dealmakers
When completing cross-border deals, dealmakers face both global political concerns and technical challenges as they pursue acquisitions.
Among their top concerns, respondents point to regulatory hurdles (81%) as the greatest challenge. Another 71% point to macro-economic and geopolitical uncertainties. In an uncertain world, where protectionism is on the increase and volatility is to the fore, these concerns do not look likely to dissipate any time soon.
Read Michael Sonego’s, Baker Tilly’s Global Corporate Finance Lead thoughts on these statistics and what the key trends in the M&A will be in 2019.
At a deal process level, post-merger integration (77% of respondents) and deal sourcing (64%) are also significant challenges. The difficulty of performing thorough due diligence can also cause issues, with dealmakers now required to conduct more exacting scrutiny of every aspect of potential acquisitions in order to avoid bear-traps. Close to two-thirds (68%) of respondents say this is a primary concern as they pursue deals.