KPMG’s latest High Growth Markets International Acquisition Tracker has revealed that rising domestic confidence in many developed markets is not yet translating into an increase in cross-border acquisitions and that limited confidence and currency fluctuations are influencing these global M&A deal volumes.
The report found that developed to high-growth acquisitions were down 11 per cent between H1 and H2 2013; high-growth market acquirers of developed market targets were up seven per cent in the same period; and overall global M&A decreased by 13 per cent over the course of 2013.
Deals between developed market acquirers and high-growth market targets (D2H) continued the downward trend of the last three years, falling back to 2009 levels in H2 2013. To put it in context, 2009 was the low point of the global downturn, with the fewest D2H transactions since pre-2005.
On the other hand, high-growth market acquirers (H2D) appear to be more proactive, prioritising deals in developed markets over investments in other high-growth markets. Currency fluctuations also appear to be influencing the pattern of deals coming out of key high-growth markets, such as South America.
‘Globally speaking, the vehicle powering deals involving high-growth markets is stuck in neutral,’ said Tom Franks, KPMG’s global head of corporate finance. ‘We are seeing a trend towards high-growth markets acquiring in developed markets in order to diversify their portfolios.
‘But currency movements have significantly hampered those efforts, particularly in markets in South America, and we have seen a relative upswing in investments from these markets into other high-growth markets.’