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Finding Right M&A Tartget Hardest Part of Foreign M&As

KOTRA survey: 49.2% of companies seeking foreign M&A deals say the hardest part is finding the right M&A target

Positive response from 65% of companies with experience in foreign M&As, 80% seeking additional M&A deals

The Korea Trade-Investment Promotion Agency (KOTRA) has conducted its first survey on small and medium companies that are interested in merging with or acquiring foreign businesses to help them achieve their goals by taking stock of the difficulties they face in the process as well as any suggestions they may have. Almost half (49.2%) of the companies surveyed cited 'collecting data and finding M&A targets' as the biggest obstacle to foreign M&As.

Of the companies that were unable to make a foreign M&A deal, 53% said it was because they failed to find the right business for sale, proving that companies need greater support in finding foreign M&A targets. In 2016, Korean companies focused their foreign M&A efforts on companies based in Asia or North America that have high potential for growth or operate in large markets.

The biggest reason for pursuing foreign M&As was 'to produce locally' (29.7%), followed by 'to enhance technical competitiveness' (26.4%), and 'to secure a distribution channel' (18.7%). In particular, 64.7% of the 34 companies with prior experience in foreign M&As said they are satisfied with the outcome, for various reasons, such as increase in sales, technical advancement, developing new sources of profit, and gaining a foothold into global markets.

According to Kim Yongchan, head of KOTRA's Global M&A Support Office, "Over 80% of companies that have prior experience said they were seeking to make additional foreign M&A deals, showing that foreign M&As have become an effective means for companies to strengthen their global competitiveness," adding, "as small and medium companies have expressed that their greatest difficulty is in finding the right M&A target, KOTRA will expand its support to help them overcome that obstacle."

KOTRA has been holding a Foreign M&A Target Information Session each quarter since Q4 2015, providing Korean companies with information of foreign M&A targets, and continues to increase its support for the actual M&A process after companies decide which foreign businesses they wish to merge with or acquire.

Foreign M&As in 2016

Ranking Region No. of deals Major industries
1 Asia (including China) 20 Chemical, electronic, automotive, consumer goods, etc.
2 North America (USA, Canada) 19 Automotive, bio technology, software, consumer goods, energy, financial, production goods, etc.
3 Europe 4 Consumer goods, industrial products, mass media, etc.
4 Other 3 Automotive, manufacturing, etc.
Total 46

Source : Invest Korea (Apr. 3, 2017)

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