Thai MNCs refocusing M&A activities on Asia
THAI and other Southeast Asian multinational companies (MNCs) are looking at mergers and acquisitions in Asia rather than Western countries and the post-M&A environment has become the priority focus for business owners, according to a survey by Willis Tow
In the past three years, Thai conglomerates have made significant acquisitions abroad. In 2014 alone, Thai companies invested almost US$4 billion (Bt140 billion) overseas, more than doubling the figure in the previous year.
Investment by Thai conglomerates helped Asia-Pacific companies last year account for 40 per cent of the companies in the Fortune Global 500, up from 16 per cent in 2014, surpassing North America (30 per cent) and Europe (28 per cent).
Most Thai companies are run as family businesses, which entails multitasking to accelerate their growth, unlike companies in Western countries, which build growth step by step. Therefore, the style of Thai companies is similar to those in other Asian countries that must attract global talent, said Pichpajee Saichuae, managing director of Willis Towers Watson Thailand.
Willis Towers Watson surveyed more than 50 companies in Asia including Thai conglomerates.
She said six areas needed to be focused on by Asian trailblazers: globalisation strategy, global governance, M&A, reprogramming cultural DNA, leadership development, and diversification and inclusion. However, in the view of Willis Towers Watson Thailand, global governance, M&A, reprogramming cultural DNA and leadership development are the critical challenges for Thai MNCs.
Many Asian trailblazers still operate without a global governance framework, making this all the more challenging, while Asian multinationals also tend to concentrate control locally more than MNCs based in other regions.
Global governance is important for Asia companies that want to be global companies. The owners have to have clear power to make decisions in each business unit, while some companies are in the same country as the MNC’s headquarters and others are abroad. Certain decision-making power will help keep global talent and avoid redundancy, she said.
According to the survey, Asian multinationals tend to concentrate control locally, so they have to rethink M&A activities in their own region. Hence recent M&A activities have been made in the same country or in the same region rather than acquiring businesses in beyond their region’s borders. Unsuccessful deals result when too little attention is paid to proper people integration.
Pichpajee noted that Thai and other Asian MNCs said they had changed their M&A focus from Western to Asian countries because of governance issues. Moreover, those MNCs have changed their focus on the post-M&A situation after learning that previous M&As turned out to be less valuable than expected.
