Deal value continues to grow in M&A markets across Asia as the second half of 2014 set a new high benchmark for year-on-year figures. Confidence in the boardroom has been underlined by the return to the fray of the ‘mega-deal’ and a renewed appetite for exploring the middle-market (deals between US$51 million – US$500million) for its M&A potential.
Deals in the second half 2014 amounted to US$313 billion, a substantial increase of US$66 billion from the same period in 2013. Cash rich companies, confident in the stability of financial markets, were involved in an impressive 1,922 deals, a significant 24% increase over 2013.
In its newsletter series, Asia-Pacific M&A Barometer, Ascent Partners and Mergermarket, continue to examine market trends and opportunities across the region. The newsletter aims to give insightful analysis of sectors and deals, as well as overview of private equity and inbound transactions.
· Despite experiencing its slowest growth in 24 years of 7.4%, China remains the geographical leader with 781 deals at a value of US$167 billion.
· H2 saw continued strength in various sectors. With TMT (302 deals at a value of US$35 billion), industrials and chemicals (405 deals at a value of US$57 billion ), and business services (205 deals accounting for 10.7% of regional growth) leading the way.
· Private equity firms yielded US$32 billion in buyouts. India is second only to China with 32 deals representing 18.9% of the regional volume.
Intellectual property (IP) meantime is fast becoming a central pillar in M&A considerations and the trends that exist in the IP landscape that will shape future M&A.
“In recent years, we have seen companies paying huge sums of money for IP,” said IP Commercialization Council (IIPCC) board member Johnson Kong. “Yet companies often fail to fully appreciate the true nature of IP and fail to grasp how complicated the valuation process is, often leading to them using the wrong people.”
With a sustained trend towards viewing IP as a vital part of the M&A process, it is becoming increasingly important for buyers to holistically understand fundamentals of the potential acquisitions of IP.
“Some major considerations should be: does the IP being acquired fit the acquirer’s business strategy, is the IP being acquired valid, can the acquiring company actually commercialize the IP being acquired, and, finally, how do you implement an adequate defensive strategy,” IIPCC vice-president of knowledge management Ron Yu.
One of the central pillars, therefore, will understand the commercialization process. As Kong points out, “IP commercialization involves creating IP, protecting IP, and then finding suitable commercialization partners.”