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Local firms shows low expectation of growth via M&A: report

Vietnamese firms continued to show lower expected growth through mergers and acquisitions (M&A) for the next 3 years compared to the average rate across other economies in the Southeast Asian region (ASEAN), according to a newly release report.

Vietnamese firms continued to show lower expected growth through mergers and acquisitions (M&A) for the next 3 years compared to the average rate across other economies in the Southeast Asian region (ASEAN), according to a newly release report.
Vietnamese firms continued to show lower expected growth through mergers and acquisitions (M&A) for the next 3 years compared to the average rate across other economies in the Southeast Asian region (ASEAN), according to a newly release report.

Only 12 percent of Vietnamese businesses expect to grow through M&A in 2013, down from 13 percent in 2012, according to the International Business Report (IBR) released on Thursday by global consulting firm Grant Thornton.

In comparison, 21 percent of businesses in ASEAN economies expect to grow through M&A in 2013, down from 23 percent in 2012, according to the IBR jointly conducted by Grant Thornton and its core research partner, Experian.

Vietnam M&A market in 2012 fell dramatically compared with 2011 with as many as 157 deals amounting to $4.9 billion, down 41 percent in the number of deals and 28 percent in value over 2011, according to Vietnam M&A 2012 Report and 2013 Outlook of StoxPlus Corp.

While domestic M&A was not as hot as 2011, inbound M&A activities were still active in 2012 with total deal value of $3.5 billion, which stands for 70% of total market size, said the report of StoxPlus Corp.

The big picture

The IBR has found that M&A prospects are driven by fastest growing businesses.

The IBR data shows that 31 percent of businesses globally expect to grow through M&A over the next three years, up from 28 percent in 2012. However, this rises to 55 percent of dynamic businesses and is a pattern repeated across all regions.

For example, 47 percent of all businesses in North America plan to grow through M&A, a ten-percentage point rise from this time last year; but this rises to 71 percent for dynamic businesses. In addition, across the G7, dynamic businesses (64 percent) are almost twice as likely to be looking at M&A as the all business average (36 percent).

In addition, the last year has shown businesses putting these plans into action with 39 percent confirming that they have seriously considered at least one acquisition over the past 12 months.

“The results are important on three levels. Firstly, 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,” said Mike Hughes, global leader for M&A at Grant Thornton.

 “The 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,” he said.

 “Finally, the evidence that these businesses are actually investing time and funding into investigating acquisitions now, rather than just stating an aspiration to acquire in the future, is a great indicator of a robust market,” he added.

The Grant Thornton IBR provides insight into the views and expectations of more than 12,500 businesses per year across 45 economies. This unique survey draws upon 22 years of trend data for most European participants and 11 years for many non-European economies.

Data collection is managed by Grant Thornton’s core research partner, Experian.

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. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.