Emerging markets M&A deal volumes down in 2012

NEW YORK: Merger and acquisition (M&A) activity among developed and emerging markets fell in 2012 with the fewest number of completed deals since the peak of the financial crisis in 2009, a new survey showed.

The number of completed deals fell 11.8% last year versus 2011, according to audit, tax and business advisory services firm KPMG.

In its latest Emerging Markets International Acquisition Tracker (EMIAT) study, the deal flow dropped to 1,994 from 2,260. There were 1,935 deals completed in 2009.

“Due to uncertain economic conditions, many companies held off on making acquisitions even though they had cash to deploy,” Mark Barnes, national leader of KPMG’s US High Growth Markets practice, told Reuters in an email.

“But we are seeing pent-up demand in the marketplace as companies are looking to make deals in other markets and expand as part of their growth strategies,” Barnes said.

Three broad categories of M&A activity were tracked by KPMG using Thomson Reuters data: developed market acquirer’s of emerging and high-growth market assets and vice versa; and acquisitions of one emerging and high-growth market company by a peer in another emerging and high-growth market.

Overall, the deal volume between high-growth emerging markets fell just over 24% last year to 225 completed transactions, down from 297 in 2011.

US-based companies were the most popular targets for M&A activity by emerging-market buyers, albeit at a slower pace than the prior year. The number of transactions, at 92 for the year, represented a 9.8% decline from 2011 totals.

“The US is a sound investment destination for companies based in emerging markets looking to expand their geographic reach, and as a result, many of these companies are actively pursuing transactions in the US that align with their growth strategies,” Dan Tiemann, KPMG’s Americas lead for Transactions & Restructuring, said in a statement.

“On the outbound side, we’re seeing US companies flush with cash looking to emerging markets for growth opportunities,” Tiemann said. — Reuters