Source of article: The Business Times

In summary:

Regional M&A transactions have picked up since the second-half of 2023. The burgeoning growth of AI has been a driving force for corporations to expand and accelerate lateral growth. Private equity firms are undertaking portfolio reviews and embarking on disposal plans to realise previous investments to optimise returns.  With increasing global emphasis on lower carbon footprint and net-zero regulatory compliance, the need for transformative energy transition and consequential disruptions to various businesses have contributed to the growth of M&A activities. Key players in the automotive industry, for example, are acquiring mining companies to secure minerals supplies required to produce batteries for EVs.  

Higher interest rates and an increasingly difficult financing environment have resulted in significant business restructurings and distressed assets sales. Digitalisation has also contributed to the impetus for business transformations, leading to the growth of M&A transactions world-wide. In Singapore, lower valuations and the lack of liquidity have resulted in a number of privatisations and exit offers in the local bourse in recent times.

It is presently a buyers’ market for cash rich companies. A number of such transactions are likely to be mid-market deals. Buyers are mindful that securing financing for M&A is not a given in a tight financing market. Terms for securing loan or private equity financing may not be commensurate with the forecasted returns. The value proposition for any asset or business acquisition must be compelling. Transactions which are transformative to businesses are likely to gain buyers’ interests. Buyers and their sources of financing are, however likely to apply greater scrutiny and robustness in the conduct of due diligence for any proposed acquisition. This will take considerable time. Proposed transactions may not pass muster in the due diligence process. Investors of public companies should thus note that not every announced M&A will come to fruition.

I shared my views with the Singapore Business Times in the attached front-page story published on 5 October 2023.

My post on LinkedIn is here.