Mergers & Acquisition Across Emerging Markets

Over a period of two decades since 1990, the number and the volume of the Cross-Border Mergers and Acquisitions (CBMA) have increased dramatically. About one-third of merger and acquisition deals are cross-border these days (Liao et al, 2011). Although the CBMA deals are still dominated by developed markets acquirers owing to a more developed finance centric economy, emerging markets acquirers have played an increasingly large role in recent cross-border deals. Reports have unearthed an interesting fact that there has been a fundamental shift in the Merger and Acquisition world since 2002, with companies from developing countries such as India, China, Malaysia, the United Arab Emirates, Russia and South Africa snapping up firms from the developed markets at an astonishing rate, with India spearheading the acquisition trend. The following year, results shown by AT Kearney report (2009) further highlighted the changing trend. During 2002-2007, the CBMA deals originating in emerging markets firms grew at an average annual rate of 26%, as compared to a global rate of 6%. Amongst these, CBMA by Indian companies increased from USD 23 million in 1990 to USD 29 billion in 2007 (UNCTAD cross-border M&A database) but, the financial crisis in 2008 led to a decline in volume in 2008 and 2009. The key thing to watchout for and analyse is the impact of these CBMA on the world economy. Also equally interesting is the value these deals have managed to create, both in abstract as well as perceived terms, specially the shift in domination of the world economy by the Asian markets.