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Aug 163 min read

Global M&A Surge: Rethinking Corporate Strategies


Rising M&A Activity and ESG Awareness

Despite economic instability, the global M&A environment shows promise in 2024 with major deals like DBS acquiring Citi's Taiwan operations. Energy and consumer product sectors see increased activity. Though a major rebound isn’t expected, market optimism is growing.

According to PwC’s 27th Global CEO Survey, 45% of business leaders believe their companies won't survive the next decade without changing their current operations. M&A participants must proactively assess risks and opportunities to find new value sources.


Three Major Trends in M&A


  1. Increase in Large Retail Transactions: Focus on retail, tech, media, and communications.

  2. Slowing Foreign Investment: Buyers mainly from Southeast Asia and North America.

  3. Strategy Shift in Overseas M&A: More investments in Europe, targeting automotive connectivity.


Drivers of M&A Trends

Digital transformation demands diversification. When companies can't achieve strategic goals alone, M&A becomes essential to maintain a competitive edge. Companies should strategically divest non-core assets, reinvest in M&A, and focus resources on core businesses for greater financial flexibility.


ESG as a M&A Hotspot

Beyond expanding economic scale, M&A targets firms with strong ESG capabilities to address initiatives like the EU’s CBAM and CCA.


Keys to Cross-Industry M&A Success

Despite geopolitical instability, stricter cross-border regulations, and inflation impacts, cautious development of mid-sized deals under $500 million is advised.


Ongoing Industry Consolidation

Local firms and private equity securing international investments are becoming mainstream. Hidden champions attract investments, complete leadership transitions, and align with capital markets. Local private equity funds leverage market knowledge and low-cost financing to support consolidation and succession, enhancing post-merger value.


Key Observations and Strategies

  1. Return to Strong Fundamentals in Industry M&A: Particularly in electronics, biotech, and semiconductors.

  2. Cross-National Equity Investment Insights: Market entry, market share growth, supply chain expansion, and talent acquisition.

  3. Strategic Acquisitions at 66%: Companies use M&A to accelerate integration and strengthen supply chain security.


Post-Merger Integration Essentials

PwC Taiwan reports 72% of respondents find post-merger integration planning crucial:

  1. Retaining Key Talent: Ensures stable operations post-merger.

  2. Flexible Strategy Changes: Adjust investment portfolios based on operational efficiency.

  3. Decisive Non-Core Business Disposal: Quick sales of underperforming units.


Global M&A 2.0 Strategy

Entering the "M&A 2.0" era, companies should adapt to environmental shifts, focusing on Southeast Asia’s resources and demographic advantages. With the RCEP and CPTPP, firms should utilize cross-border M&A to enhance competitiveness.

PwC identifies Southeast Asia, the Americas, and Japan as new hotspots for Taiwanese firms, aiming to adjust supply chains and diversify production bases through M&A.


McKinsey’s Five Recommendations for Companies

  1. Reassess M&A Strategies: Optimize asset use and consider business divestitures.

  2. Adjust M&A Themes and Directions: Address geopolitical risks with vertical integration.

  3. Enhance Value Creation Standards: Seek diverse synergies.

  4. Diversify Transaction Models: Use joint ventures and strategic alliances to reduce debt costs.

  5. Milestone-Based Payment Structures: Lower transaction risks.


CEOs globally remain optimistic about M&A prospects. By integrating resources and leveraging opportunities, companies can expand efficiently. To thrive over the next decade, firms must reshape business models and adopt comprehensive strategies across operations, sustainability, and compliance. Utilizing AI and retaining talent are critical for transformation and value creation.

Reference：

潘家涓營運長、黃俊榮執行副總經理，勤業眾信財務顧問服務2024年趨勢解析《財務顧問服務篇》https://www2.deloitte.com/tw/tc/pages/finance/articles/2024-outlook-fa.html

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