What are the latest M&A trends in Asia Pacific?

By Oliver Rott

This has been a year of adjustment and altered expectations in Asia Pacific and globally. Fortunately, the Asia Pacific region is already starting to recover from the economic effects of the pandemic and there is a lot of capital to deploy due to drastically reduced spending earlier in the year. While some of our deals are moving forward despite COVID-19, the first half of the year was slower than previous years. However, there are increased signs of the M&A market picking up in Q3 and Q4. Long-term strategic acquisition goals are still in place during these turbulent times. Buyers are always looking for companies that can meet the needs of the next billion consumers. E-commerce, technology, healthcare and consumer sectors are strong in China and other Asian countries. We’re seeing more interest in scalable businesses that demonstrate resilience in the form of strong recurring revenues.

Companies are being forced to adapt during the pandemic and STS Asia Pacific has had to be creative too. Since potential buyers of a manufacturer in the chemicals space couldn’t travel onsite to meet the management team and see the plants, we produced an innovative 90-minute interactive virtual facilities tour to showcase the business using drone footage. While virtual tours will never completely replace the face-to-face experience because people want to be able to shake hands across the table, they could still be used going forward as a valuable tool to reduce travel costs. Access to decision makers has been surprisingly quicker and easier during the pandemic as executives are more readily available due to travel restrictions and are open to reviewing new opportunities. This is often offset by slower internal processes, however, and generally speaking the M&A process is currently taking slightly longer.

Overall, the economic slowdown is giving entrepreneurial and family business owners time to reflect on their businesses. This has resulted in more owners wanting to sell or partner with larger strategic buyers. Increased M&A activity is expected across Asia Pacific in the next two quarters as we see a return to some form of normality in the market and region.

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