Global interest in the Asia-Pacific service sector is set to drive a new wave of M&A activity

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Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia Pacific region.

This is the first part of their discussion: What are the challenges and opportunities for the B2B services sector in Asia-Pacific over the coming years?

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The B2B services sector in Asia-Pacific (APAC) is not as developed as its counterparts in North America or Europe mainly because the primary and secondary sectors still remain the main engines of economic growth in the APAC region. As these sectors reach maturity, the services sector will follow suit in the years to come.

Another major challenge for B2B consulting firms in the APAC region was the relatively low appreciation for services in most Asian business cultures. This is mostly the result of the region’s greater emphasis on tangible, physical items that can be traded.

Also labour costs are generally lower in APAC than in Europe or North America – with notable exceptions in Japan, Australia, New Zealand, Singapore and Hong Kong – meaning companies tend to be less pressured to increase productivity by improving their business processes.

However, in recent years, the situation has been evolving due to economic development, globalization and technology trends, which have increased the need to boost productivity.

Similarly, with technological advancements changing the way business is conducted globally, corporate Asia is beginning to come to terms with the role services firms play in implementing change and losing its previous aversion to services businesses.

Finally, while the size and diversity of the APAC market poses a challenge in terms of international development – with different languages and legislation to navigate – it is also a growth factor for the M&A market. It’s this scale and diversity that leads regional and international players to see acquisitions as necessary to build presence and dominance in the region.

In mature Asian markets, such as Japan and Singapore, and some developing ones, this has led to a surge in international M&A activity.

Local players are deciding to reduce their dependency on local markets, and international players are looking to tap into the economic growth potential of APAC. As a result, the trend towards consolidation is now firmly under way in all segments.

Click here to find out what to focus on when expanding into APAC markets.

Summary:

  • Expect greater focus on the services sector in APAC markets and room for growth for quality companies
  • Increasing international interest and a strong consolidation trend will drive M&A activities in the coming years
  • You should become ‘sale’ ready as soon as you can

To watch the full video interview with Prof. Kevyn Yong, Dean of ESSEC Asia-Pacific; David Jorgenson, CEO at Equiteq; and Jean-Louis Michelet, Managing Director, Equiteq Asia-Pacific visit here.

If you are ready to sell your business or discuss plans to realize the value in your consulting firm, please get in touch with us for a confidential conversation.

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