Private equity (PE) funds are also looking to increase their investment in Asia-Pacific. More than four in five Asia-Pacific respondents indicate that they expect increasing competition for assets in the coming year, with 57% saying they’ll be competing against PE firms.
Concerns about competition or antitrust reviews and valuation were key reasons for deal termination in 2020, as 53% of Asia-Pacific respondents indicate that their company failed to complete or canceled a planned acquisition in the last 12 months. Interestingly, this percentage is lower than the response of 64% to the same question in the last edition, indicating that the pandemic has not led to more deal cancellations.
Eighty-nine percent of senior executives indicate they will be looking for cross-border acquisitions in the next 12 months. The enthusiasm for cross-border M&A is particularly strong for Japan and countries in South-East Asia. Top investment destinations vary from country to country. However, 71% say they are planning to invest within the region, with India, Singapore, Japan, China and Thailand the top five investment destinations.
Regional trade agreements help build familiarity and improve confidence for dealmaking. The RCEP alone is expected to accelerate dealmaking with neighboring countries. The RCEP will also further enhance supply chain integration in Asia-Pacific — something senior executives cite as one of their top strategic drivers for pursuing M&A.