Emerging Markets Not Suitable for Mergers and Acquisitions

mergers and acquisitions

mergers and acquisitions

On Thursday, a new survey showed that operations involving mergers and acquisitions taking place in emerging and developed markets dropped considerably in the first half of the year compared to the exact period a year ago, mainly because of the ongoing Euro Zone crisis.

According to KPMG, the business, tax and audit advisory services firm, there was a noticeable slowdown on deals which had been completed, as the number dropped from 15.8 percent for the duration of the first six months of the year, compared to the first six months of the last year.

The latest version of EMIAT or Emerging Markets International Acquisition Tracker study showed that the slowdown on deals had resulted in a drop from 1,163 to 979 and marked the least number of deals that had been completed since the first half of the year 2009.

Mark Barnes, the leader of the KPMG LLP’s U.S. High-Growth Markets practice, believes that the present Euro Zone crisis had led to the creation of a bleak outlook of the global economy in general, which by itself was resulting in a slowdown on deals involving mergers and acquisitions.

Using data derived from Thomson Reuters, KPMG was able to track three extensive categories of mergers and acquisitions operations: acquisitions of one emerging and high growth market company by a peer in another emerging and high growth market, market acquirer’s of emerging and high growth market assets and vice versa.

The volume of deals taking place between emerging markets with a high growth rate dropped 30.72 from the previous year to the current one.

Evaluation of the Situation

KMPG was able to make a statement that it views restricted pressure for deals ahead in these high growth and emerging markets because of increasing local consumption and the rise of the middle class section.

Companies based in the United States completed the greatest number of deals, for the purpose of gaining assets located in high growth and emerging markets, at a hefty 108. The number is indicative of a 33 percent drop from the previous period when the completion of almost 160 deals stood for the best first half since the year 2008.

KPMG holds the opinion that this fall in mergers and acquisitions made by companies in the U.S. goes together with a worldwide slowdown on deals of a D2H or developed-to-high-growth market nature, which fell by about 15 percent or 661 in the first half of this year versus 778 in the first half of the previous year.

Degree of Acquisition

The United States happened to be the largest acquirer but is also the preferred destination for corporations from high growth and emerging markets who are on the lookout to make purchases.

The survey indicated that companies associated with high growth and emerging market closed a total of 47 deals for the purpose of securing U.S. assets in the first half of 2012, which is down by 48 from those completed in the year-ago period.

In total, high growth and emerging market companies were successful in making 203 mergers and acquisitions in developed financial systems alone in the first half of this year which was lesser compared to the 219 from the year-ago period.

The research took into account deal flows between 15 of the developed economies or groups of financial systems and 13 of the high growth economies or groups of economies.

Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Twitter, Facebook

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