M&A leans towards emerging markets amid Eurozone woes

COMPANIES are increasingly looking to the east for planned M&A activities as fears over Eurozone instability continue, according to research from the Economist Intelligence Unit.

“Although the worst of last year’s market turmoil may be behind us, the macroeconomic and political uncertainties of 2012 continue to create an unstable environment for M&A,” said Matthew Layton, global head of corporate at Clifford Chance, which commissioned the report.

“But there are clear signals that at a company level confidence is rising for many and M&A forms a key part of strategic plans.”

Of the 377 people surveyed, all from firms with revenues over $1bn, 56 per cent said the key focus of their growth strategy is emerging markets, compared to the 22 per cent who pointed to domestic or developed markets.

A quarter of those polled would look to China for M&A, with 19 per cent interested in South East Asia and 18 per cent in India.

The report also showed that 37 per cent of respondents would prefer a joint venture or strategic partnership in cross-border deal activity, while 32 per cent are in favour of more traditional M&A. This is a turnaround from two years ago, when mergers and acquisitions were the preference with 39 per cent to JV’s 34 per cent.

But more than half of the firms involved in the research said they are discouraged from buying overseas because of concerns about bridging cultural gaps.