India, China private biz owners upbeat on M&As
Saturday, 26 April 2008

The current turbulence in world financial markets notwithstanding, there exists a positive attitude among private business owners in emerging economies, particularly in India and China, toward mergers and acquisitions, says a global survey, reports PTI.

“Privately Held Businesses (PHBs) in the fast growing economies such as mainland China and India see international M&A as one means of progressing up the value chain through acquisition of brands and distribution channels in North America and Europe,” Grant Thornton India M&A partner Pankaj Karna said.

P.H.Bs see domestic and international M&As as a key strategic tool to drive growth, which is a reflection of the current positive attitude amongst business owners in the emerging economies, Karna added.

In North America and the B.R.I.C. economies (Brazil, Russia, India and China), which are the most acquisitive regions, between 48 and 59 percent of surveyed business owners said they anticipated a transaction in the next three years, the International Business Report of global consultancy firm Grant Thornton International said.

The survey reveals that business owners in the fast growing B.R.I.C. economies are now embracing the idea of M&As, with 59 percent of businesses in these countries reporting an anticipated acquisition in the next three years and are often keener to make such deals than those from more mature markets.

Besides, a greater proportion of businesses in the B.R.I.C. economies are expecting to undertake a public listing in the next three years, compared to respondents in more mature markets such as the United States and the United Kingdom.

The report highlighted that “as much as 44 percent of PHBs globally are planning to grow through acquisition in the next three years and 23 percent of those businesses anticipate a cross border deal”. Globally only eight percent of the respondents anticipate that they would be selling their businesses during the next three years.

“Whilst PHBs may not be conducting headline grabbing deals... they are increasingly becoming more confident and successful in transacting internationally,” the report said.

Among the key objectives that are driving overseas acquisitions by India’s privately-held companies are gaining the global competitiveness, acquiring technology and increase their valuations, the report said. “Fundraising is easier now than it was five or 10 years ago. Privately-held businesses in India are particularly positive now,” Karna said.

In India, reforms since the 1990s have unlocked India’s economic potential and positioned the country as one of the fastest growing economies in the world.

India has a young, educated and ambitious labour force. Growth is accelerating, boosted by dynamic, knowledge-based services sector and expanding manufacturing, the report added.

The Grant Thornton International Business Report (I.B.R.) is a global survey of business owners from medium to large P.H.Bs. The survey covers over 7,800 respondents in 34 economies.

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