Mergers and acquisitions market cools down with positive outlook ahead

Addressing the 15th M&A Vietnam Forum, Deputy Minister of Planning and Investment Tran Duy Dong cited surveys by renowned global research agencies, saying that global M&A activities had been gloomy this year due to the US Federal Reserve’s decisions to constantly raise interest rates, causing financial costs to increase and asset prices to decrease.

According to a survey conducted by GlobalData, the total number of M&A deals as of the end of October decreased by 16.8% compared to the same period last year. Meanwhile, a KPMG survey shows that M&A transactions in Vietnam fell by 23% in the first 10 months of the year to US$4.4 billion, and the year-end value would be far away from hitting the 2022 figure of nearly US$6.8 billion.

Warrick Cleine, CEO of KPMG in Vietnam and Cambodia, attributed the gloomy picture of this year’s M&A market to global political and macroeconomic instability, along with rising inflation, that have made investors more cautious about transactions.

Furthermore, the tightening of the monetary policy in major economies leading to higher interest rates has also impacted emerging markets, making transactions more expensive and negatively affecting the overall quality and quantity of transactions in the market.

However, experts said the Vietnamese M&A market still has many opportunities and prospects ahead thanks to increasingly strengthened factors. Indeed, the Government has introduced a number of measures specifically aimed at stimulating the economy and upgrading the domestic stock market, thereby building up investors’ confidence in 2024.

Economic difficulties will force many businesses to seek M&A solutions which can help to further fuel the market. In addition, experts noted that this period can be considered an opportunity for investors with capital on hand to purchase attractive projects, with more reasonable asset valuations.

The drastic and effective implementation of these measures will therefore importantly contribute to helping the economy to gather full steam and develop sustainably in 2024 and beyond, said Deputy Minister Dong.

“This difficult time is also the right time for domestic businesses to reconsider their strategies, seek new growth models, and focus on restructuring production and business activities in a more long-term, sustainable direction. Many businesses have worked out strategies and plans to seek partners, and M&A is a preferred choice. A positive sign is that domestic businesses are ready to take over assets of fellow as well as foreign businesses to perfect their ecosystem,” stated the investment official.

Moving forward to 2024, M&A transactions are poised to grow in key industries such as green energy, technology, real estate, and health care due to policy support and increased demand. Political stability along with the enforcement of free trade agreements will help to fuel FDI inflows. In addition, high economic growth of more than 6% by international financial institutions will also encourage foreign investors to explore opportunities in the Vietnamese market.