Bain report says Chinese execs, investors upbeat on M&A's

Chinese executives and investors remain upbeat on mergers and acquisitions, with 80 percent of respondents in a survey confirming that deal activity will continue to be a central corporate strategy for growth and profitability in the coming year.

This follows the emergence of recovery signs in the final quarter of last year.

China's M&A trend in 2022 was in line with the global drift, with deal value dropping 34 percent from a year ago and deal volumes slumping 42 percent, according to the latest Global Mergers & Acquisitions Report by Bain & Company.

Globally, M&A value recorded a dramatic drop of 36 percent in 2022 to US$3.8 trillion.

A recent survey of over 2,800 corporate executives in China suggest as many as 80 percent of them estimate the number of merger and acquisition deals to stay at the same or even rise compared with last year.

There were only five big deals exceeding US$5 billion in China, while those under US$500 million made up 38 percent of the total number of deals.

There was a steady increase in deal volumes in the fourth quarter in China despite a decline in deal values, indicating an influx of multiple smaller deals.

The value of strategic deals in China rose to US$28.9 billion in December compared with the lowest level of US$10.4 billion in February last year.

The report also expects the prevalence of small- to mid-size deals in the coming year as they're more likely to meet strategic goals with less reliance on financing and regulatory scrutiny.

Consumption, technology segments would continue to be vibrant areas for investors to seek suitable targets and drive further growth, according to Zhou Hao, a partner at Bain & Co and head of Bain's China Private Equity and Merger & Acquisition practice.

The expansion of China's registration-based initial public offering system would allow equity investors and smaller players to become more motivated to carry out merger and acquisition deals, he added.