Los­ing dom­i­nance in Asia-Pa­cific M&A

Shanghai Daily - - BUSINESS - Ding Yin­ing M&A

CHINA’S out­bound share of M&A ac­tiv­ity in the Asia-Pa­cific re­gion plunged to 14 per­cent in the first half of the year from an aver­age 40 per­cent dur­ing 20152017, Bain & Com­pany says in its lat­est China out­bound M&A re­port.

Chi­nese com­pa­nies use over­seas merg­ers and ac­qui­si­tions to help them win at home or gain lead­er­ship in se­lected in­dus­tries over­seas.

As Chi­nese com­pa­nies be­come more ex­pe­ri­enced at out­bound M&A, they gain so­phis­ti­ca­tion in crit­i­cal ca­pa­bil­i­ties, such as de­vel­op­ing a clear in­vest­ment the­sis, due dili­gence skills and merger in­te­gra­tion.

“In China, as else­where, win­ning out­bound ac­quir­ers will be those that make the nec­es­sary ad­just­ments to evolve their M&A strat­egy along with a global mar­ket that never stops chang­ing,” said Zhou Hao, part­ner with Bain & Com­pany and head of its China M&A op­er­a­tions.

“China’s out­bound boom will only con­tinue as com­pa­nies look to cap­ture new ca­pa­bil­i­ties that strengthen their do­mes­tic po­si­tion, while also grow­ing over­seas for a lead­er­ship po­si­tion in in­dus­tries in which they can gain a com­pet­i­tive edge.”

Com­pa­nies with more fre­quent and large deals did much bet­ter in terms of to­tal share­holder re­turn, ac­cord­ing to Bain’s anal­y­sis of the per­for­mance of more than 700 Chi­nese com­pa­nies that made ac­qui­si­tions from 2013 to 2017. The num­ber of Chi­nese out­bound deals for full own­er­ship from 2016 to 2017 more than dou­bled from 2013 to 2015.

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