M&A volumes look to increase as privately held businesses plan for strategic growth

An increasing number of privately held businesses (PHBs) are planning to grow through acquisition according to the Grant Thornton International Business Report (IBR). In its latest global study conducted at the end of 2010, the proportion of respondents anticipating making an acquisition in the next three years increased to 34% this year, an increase of 8% compared to twelve months ago.

Mike Hughes, global leader - mergers and acquisitions for Grant Thornton International, explains: "At a time of improving economic and financing conditions, businesses are again looking towards acquisitions as a means of growing revenues as they shift their mindset from survival to strategic growth."

PHBs in the BRIC economies (Brazil, Russia, India and China) are among those leading the way with 44% of respondents considering an acquisition, compared to 27% in 2010. Driven by the desire to access new markets and acquire new technology or established brands, 45% of businesses in mainland China plan to grow through acquisition, an increase of 19% over 2010.

Likewise, Indian companies, which are well experienced in dealing with overseas M&A markets, are now back on the acquisition trail, with 40% of those planning an acquisition in the next three years expecting their deals to be cross border.

Mahad Narayanamoni, M&A partner with Grant Thornton India, believes this reflects a coming of age for Indian businesses: "Indian companies are now more experienced in dealing with overseas M&A transactions and are considered serious contenders for acquiring global businesses. Acquiring global brands, gaining access to overseas markets and leveraging new technologies for Indian markets are some of the key drivers for outbound acquisitions by Indian companies."

An increase in planned M&A activity is also reflected in the results from the other major regions (see figure 1). For example, in North America, 41% of the region’s PHBs are planning acquisitions. Stephen McGee, national practice leader of corporate finance at Grant Thornton US, explains: "After two slow years, with an improving economy and easing credit market, there is considerable pent-up demand for acquisitions."

Grant Thornton member firms offer specialist M&A advice in every important trading centre in the world.

For further information please contact:

Christine Hobart
International communications manager
T +44 207 391 9548
E christine.hobart@uk.gt.com

Notes to editors

The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 11,000 businesses per year across 39 economies. This unique survey draws upon 19 years of trend data for most European participants and nine years for many non-European economies.

Any and all references to Grant Thornton are to Grant Thornton International Ltd (Grant Thornton International) or its member firms.

Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms. These firms provide assurance, tax and advisory services to privately held businesses and public interest entities. Services are delivered independently by the member firms within Grant Thornton International, a non-practising, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. Grant Thornton International does not deliver services in its own name or otherwise. Grant Thornton International and the member firms are not a worldwide partnership.

Data collection

The research is carried out primarily by telephone interview lasting approximately 15 minutes with the exception of Japan (postal), Philippines and Armenia (face to face), mainland China and India (mixture of face-to-face and telephone) where cultural differences dictate a tailored approach. Telephone interviews enable Grant Thornton International to conduct the exact number of recommended interviews and to be certain that the most appropriate individuals are interviewed in an organisation which meets the profile criteria.

Data collection is managed by Grant Thornton International's core research partner - Experian Business Strategies. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Q4-2010 fieldwork took place in November/December 2010.

Sample

IBR is a survey of medium to large privately held businesses, researching the opinions of over 5,700 businesses in Q42010, and over 11,000 on an annual basis. The target respondents are chief executive officers, managing directors, chairmen or other senior executives (title dependent on what is most appropriate for the individual country) from 39 economies primarily across five industries: manufacturing (25 per cent), services (25 per cent), retail (15 per cent and construction (ten per cent) with the remaining 25 per cent spread across all industries.

Locally, the sample tends to cover the industries mentioned previously, with some countries being able to have local valid data for specific sectors or regions when the sample size is large enough.