Thailand sees lowest level of M&A activity on IBR survey

The IBR data show that 31 per cent of all businesses globally expect to grow through M&A over the next three years, up from 28 per cent in 2012. But Thailand, already the second-lowest last year among the countries surveyed, has now fallen to the lowest, with only 8 per cent of businesses reporting a plan to grow through acquisition in the next three years. This is significantly behind the Asean average of 21 per cent. 

Further emphasising general business pessimism in Thailand is the percentage of business leaders who anticipated a change in the ownership of their own business in the next three years. Only 5 per cent of business leaders in Thailand anticipated this, the third-lowest in the survey behind Armenia and Georgia. This is despite the fact that in other Asean countries this average was 14 per cent, an increase of 5 percentage points since last year, revealing a more optimistic and acquisitive appetite.

“These are disappointing figures,” said Julaporn Namchaisiri, managing director of corporate finance at Grant Thornton in Thailand. “At best, companies are delaying their plans due to the current volatile political and economic activity in Thailand. At worst, companies are ambivalent about the opportunities created by the imminent Asean Economic Community and the more aggressive attitude of businesses in our neighbours.”

Globally, dynamic businesses – the fastest-growing, most agile companies in the survey – led the way. The results confirm that leaders of the world’s most progressive businesses view acquisitions as an important way to supplement and boost their existing operations, according to analysts at Grant Thornton, a global network of professional services.

For example, while 31 per cent of businesses globally expect to grow through M&A, the figure for dynamic businesses was 55 per cent. It is a pattern repeated across all regions. For instance, 47 per cent of businesses in North America plan to grow through M&A, a 10-percentage-point rise from this time last year, but this rises to 71 per cent for dynamic businesses. Across Asean, dynamic businesses (49 per cent) are more than twice as likely to be looking at M&A as the total business average.

“The results are important,” said Mike Hughes, global leader for M&A at Grant Thornton. “First, the global increase in forecast M&A activity is another sign that the recovery is on a firmer footing and that the focus of businesses is moving away from simply staying afloat towards a growth agenda.

“Second is how important M&A is to the fastest-growing businesses in the world as they seek to access new markets and new pools of talent and technology to maintain their competitiveness.”

In another sign of how the global economy is changing as the developed world slowly recovers from the financial crisis, forecast M&A activity in emerging economies has dipped according to the IBR. Just 19 per cent of businesses in the BRIC economies (Brazil, Russia, India and China) expect to grow through M&A over the next three years, down from 27 per cent this time last year. Asean too declined by 2 percentage points in the last 12 months. By contrast the M&A prospects in the Group of Seven countries have risen from 29 per cent to 36 per cent over the same period.

Julaporn said: “Businesses in emerging markets were barely affected by the financial crisis, but more recently their growth has slowed markedly. This is exacerbating our situation in Thailand, as the figures suggest that many businesses in the emerging economies are taking a pause in prioritising M&A activity. 

“In contrast, many developed markets were previously operating in something of a holding pattern, waiting for signs that the recovery was sustainable and valuations realistic before making an acquisition.”