While the overall volume of mergers and acquisitions (M&A) declined in 2012, M&A within the US remained resilient as its market size, resources and talent made it the most popular target market for companies from high-growth economies, according to a report by financial services firm KPMG. The US accounted for 42 of the 216 acquisitions made by emerging economies in the second half of 2012. Chinese and Indian companies were the most active acquirers of companies based in developed countries in 2012.
In KPMG’s latest High-Growth Markets International Acquisition Tracker study, the US was identified as the most popular investment destination for companies based in emerging markets. “Emerging and high-growth market companies are continuing to diversify their portfolios outside their home market and the US remains attractive for a number of reasons, including its market size, talent and resources,” said Mark Barnes, the national leader of KPMG’s US high-growth markets practice.
The 216 acquisitions by emerging market companies recorded in developed countries in the second half of 2012 was 11 transactions short of the 227 deals recorded in the first half of that year. This was seen to be a reflection of continued uncertainty in global markets, but KPMG maintained that the performance of M&A in developed economies has been relatively consistent. Companies from fast-growing economies have remained intent on diversifying their portfolios, and the US and Europe will remain significant recipients of their investments in coming years.
The UK recorded 24 transactions from emerging market companies in 2012. Europe recorded 40 deals in the second half of 2012. South America emerged as a leading high-growth acquirer, as the number of deals from companies domiciled in the region almost doubled, from 11 in the first part of 2012 to 21 in the second half of that year.
Globally, M&A transactions declined in 2012 to the lowest levels recorded since 2009. Companies from the US were found to be more bearish in their expansion strategies in developing economies, as KPMG revealed that US-based companies completed 102 acquisitions in emerging markets in the second half of 2012, a drop from 111 transactions in the first half of the year.
“Developed markets are showing more stable levels of confidence domestically, but this is not translating into higher acquisition activity in emerging markets,” said Mr Barnes. “Deal volumes fell to 2009 levels, but there were some bright spots such as Japan, perhaps a sign that the country is bouncing back after the trauma of the 2011 tsunami and the global downturn.”