02 Jun 2021

Majority of companies expecting M&A uptick across Asia Pacific region, study finds

Baker McKenzie report says acquisitions will be a key driver of post-pandemic recovery


M&A activity will be a key driver of Asia Pacific’s recovery from the coronavirus pandemic, with more than three-quarters of business leaders in the region expecting deals to increase over the coming year, according to a new report from Baker McKenzie.

The report – Charting Growth: The New M&A Landscape in Asia Pacific – surveyed 800 senior executives, with 77% expecting an uptick in M&A transactions and 42% betting on a major increase. Most of that activity is likely to be focused on the tech sector, respondents said, with 78% expecting a marked increase in technology-related deals over the coming year.

Andrew Martin, managing principal at Baker McKenzie Wong & Leow in Singapore, said: “Differentiated economic recovery in the region is indicative of the varied challenges countries face in managing the pandemic. However, as a region, M&A is expected to remain robust, particularly in tech acquisitions and for financial institutions.”

Martin added that while the overall economic outlook will likely dictate investor sentiment, other factors such as regulation and companies seeking to access new markets will also shape the deal landscape.

More than half of respondents (57%) said their organisations would be motivated to seek M&A opportunities to acquire new tech and associated expertise, which was even higher for respondents from healthcare companies (74%) and financial institutions (85%).

Almost half of respondents (40%) said access to new markets would also be a driver for new deals, underscoring the need for organisations to expand their regional and global footprints to support their post-pandemic recovery.

Distressed investment opportunities could also be a key driver of deals in the region, with regulatory enforcements expected to lead to a rise in potential insolvencies. Companies located in Indonesia and Thailand are most worried about increased regulatory enforcements, while Indian companies are concerned about the amount of new regulations coming in.

Kate Jefferson, a member of Bakers’ Asia Pacific M&A steering committee and a partner in the firm’s Sydney office, said: “The regulatory landscape has shifted considerably since Q2 2020. Many regulators now have an expanded set of ‘tools’ at their disposal to hold companies accountable for non-compliance with increasingly onerous regulations, and the reach of the measures being implemented by regulators is unprecedented.”