March 24, 2016

Tech startup M&A growth accelerates in Asia

Asia represented nearly a quarter of all M&A activity from 2015.

Merger and acquisition activity is on the rise in Asia. The "Global M&A Review" report from Dealogic, an international financial software organization, showed that of the $5 trillion in M&As from 2015, half directly targeted American companies, while a quarter affected businesses from the Asian-Pacific region. According to the results, total M&A deals exceeded $1 trillion in Asia for the first time in history.

Crunching the numbers
Tech in Asia, a media platform for Asia's tech community, recently analyzed tech startup data, breaking down the number of deals, what countries were frequently buyers/sellers and other essential statistics. Despite a slowdown in U.S. M&A deals, Asia experienced a record-breaking number of deals – 248 – last year, which is the result of a steady increase in M&A activity since 2011.

Since 2011, Tech in Asia found that of the 535 M&A deals, 510 were acquisitions and 25 were mergers. These M&A deals accounted for $7.86 billion, where India ranked the highest in regards to the number of top deals and acquisitions. India represented 219 of the 535 deals, while the country was also responsible for acquiring 175 additional deals.

One recent notable merger is the Alibaba-Youku Tudou merger. Alibaba, an online marketplace company, announced that it would buy the Chinese online video provider Youku Tudou in November of last year. Through this acquisition, Forbes reported that Alibaba will "add it to its e-commerce portfolio, get access to a large user base and strengthen its already dominant position in Chinese e-commerce." Youku Tudou's shareholders only recently approved this deal March 14.

A turbulent economy
It is no secret that China has suffered economic difficulties in the past few months. Chinese Vice Premier Zhang Gaoli explained in an economic forum that despite the downward pressure the country is experiencing, "overall the progress is steady." Government officials stated that international trade should rise within the next two months as capital outflows from the country begin to level off, according to Reuters.

Tencent CEO Pony Ma recently announced that the company played a significant part in three of China's significant mergers during the past year, according to The Wall Street Journal. The leading provider of Internet in China showed a total revenue increase of 30 percent from 2014, demonstrating its role in bolstering the fragile growth of the Chinese economy.

According to The Wall Street Journal, due to China's slowdown in terms of economic growth and unstable stock market, investors are becoming more cautious about acquiring costly startups in big merger deals. Ma's confidence may be met with skepticism amid the tough fundraising environment many of these Chinese companies are currently facing.

Companies looking to pursue a major merger or acquisition should consult an M&A advisor today. With expert assistance, your company can make a deal that exceeds its projected growth goals. Contact us today to see how your company can benefit from a partnership with our skilled team of professionals.