MANAGING PARTNER'S MESSAGE - bdo singapore

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BDO CONNECT 8M&A OUTLOOKBy Iris Long,Advisory Services Associate Consultant IT: 6828 9616E: irislong@bdo.com.sgAs the dark clouds of economicuncertainty lift, the environment forcorporate deal-making seems to belooking brighter. The third quarter of2010 saw a pick-up in M&A activity,with the expected deal momentumto continue into 2011. Indeed, withworldwide M&A reaching $212 billionin November, it has recovered fromthe doldrums of 2009, which was a 52percent decline from the peak of 2007.Yet, uncertainty is still rife.McKinsey & Company’s report onquarterly conditions, found that thereis a record cash on United Statescompanies’ balance sheets, whichmost likely will translate to an increasein willingness to invest in growth.The report also found that many arelooking abroad, eager to capitaliseon the fast-growing economies andthe rising influence of China, Indiaand Brazil. On top of that, ThomsonReuters and Freeman ConsultingServices recently predicted a 36percent rise in global deal activityto $3 trillion in 2011. Recently thisjanuary, PricewaterhouseCoopersannounced that “key conditions are inplace for a resurgence in deal-makingin 2011.”Indeed, companies have better accessto funding and have more cash on handsince before the crisis. However, thereis still the absence of a key M&A driver– high levels of confidence. Conflictingopinions on optimistic outlooks areabound, and there is still evidencesofwariness. According to a recent survey,‘Capital Confidence Barometer’ byErnst and Young, executives havegenerally grown more positive, butuncertainties arising from persistentcredit issues, an unclear regulatoryenvironment in many nations,government deficits, currency conflictsand moves for greater governmentalrigidity continue to cause widespreadeconomic discomfort.The level of scrutiny has increasedespecially for cross-border mergers,with the long term trend of anincreasing number of cross-borderdeals. Before the economic crisisreached its depths in 2008, manycompanies around the world hadincreasingly sought to raise theirforeign presence through cross-borderM&A. That trend abruptly ceasedin 2009 with the number of crossborderdeals dropping significantly.As reported by McKinsey, cross-borderactivity as a share of total M&Avalue fell by ten percentage points,from pre-crisis levels of above 40percent. With rising protectionism,as governments are increasingly keento protect their national icons, somemulti-billion-dollar internationaltakeovers this year might thethreatened and possibly dampened.Hurdles were seen with SingaporeExchange Ltd’s proposing a takeoverof Australia’s stock market operatorASX Ltd and running into oppositionfrom Australian lawmakers who mayblock legislative changes needed forthe deal to go ahead. And who wouldforget Canada’s decision to blockBHP Billiton’s US$39 billion bid forPotash Corporation in November. Notforgetting UK explorer Cairn Energyrunning into political problems as itplans to sell a US$9.6 billion majoritystake in its Indian unit to VedantaResources, with the Indian governmentextending the deal to April 2011,saying there are many complications.Another defining feature which mayimpede M&A activity, are the changesin regulatory and tax landscapes,which has impacted private equityfirms. The Dodd-Frank Act and theAlternative Investment Fund Managers(AIFM) Directive will require anincreased focus on fund operations, ontop of more transparency to limitedpartners. Tax landscapes also continueto be a challenge, as governmentsraise taxes to cover deficits. Fundraisingwill hence remain difficult.With confidence shaky, there ishowever still a glimmer of lightfor M&A activity, with executivesshifting their focus to more strategicacquisitions, that of organic growth(improving their existing business,instead of acquiring something new).Despite great opportunities for M&Aactivity, overall low confidenceoutweighs the appetite for growth.
WHAT MATTERS TO YOUMATTERS TO USThe BDO network provides services in the following countries**this list is current as of 1 January 2011ALGERIA - ANGOLA - ARGENTINA - AUSTRALIA - AUSTRIA - AZERBAIJAN - BAHAMAS - BAHRAINBELARUS - BELGIUM - BOLIVIA - BOTSWANA - BRAZIL - BRITISH VIRGIN ISLANDS - BULGARIACAMBODIA - CANADA - CAPE VERDE - CAYMAN ISLANDS - CHILE - CHINA (PRC) - COLOMBIACOMOROS - COSTA RICA - CROATIA - CYPRUS - CZECH REPUBLIC - DENMARK & FAROE ISLANDSDOMINICAN REPUBLIC - DUTCH CARIBBEAN (ARUBA - CURACAO - ST MAARTEN) - EAST AFRICA(BURUNDI - KENYA - RWANDA - TANZANIA - UGANDA) - EASTERN CARIBBEAN (ST LUCIAST VINCENT & THE GRENADINES) – ECUADOR - EGYPT - EL SALVADOR - ESTONIA - FINLANDFRANCE - GEORGIA - GERMANY -GIBRALTAR - GREECE – GREENLAND GUATEMALA - GUERNSEYHONG KONG - HUNGARY - INDIA - INDONESIA - IRELAND - ISLE OF MAN - ISRAEL - ITALYJAMAICA - JAPAN - JERSEY - JORDAN - KAZAKHSTAN – KOREA - KOSOVO - LATVIA - LEBANONLIECHTENSTEIN - LITHUANIA - LUXEMBOURG - MACAO - MADAGASCAR - MALAYSIA - MALTAMAURITIUS - MEXICO - MOROCCO - MOZAMBIQUE - NAMIBIA - NETHERLANDS - NEW ZEALANDNIGERIA - NORWAY - OMAN - PAKISTAN - PANAMA - PARAGUAY - PERU - PHILIPPINES - POLANDPORTUGAL - QATAR - ROMANIA - RUSSIA - SAN MARINO - SAUDI ARABIA - SENEGAL - SERBIASEYCHELLES - SINGAPORE - SLOVAK REPUBLIC - SLOVENIA - SOUTH AFRICA - SPAIN - SRI LANKASURINAME - SWEDEN - SWITZERLAND - TAIWAN - THAILAND - TRINIDAD & TOBAGO - TUNISIATURKEY - TURKMENISTAN - UKRAINE – UAE - UNITED KINGDOM - UNITED STATES OF AMERICAURUGUAY - VENEZUELA - VIETNAM - ZAMBIA - ZIMBABWEBDO LLPAudit & AssurancePeter LeongEmail: peterleong@bdo.com.sgDID: 6828 9120Advisory ServicesRoss LimjocoEmail: rosslimjoco@bdo.com.sgDID: 6828 9125Business Restructuring ServicesLeow Quek ShiongEmail: quekshiong@bdo.com.sgDID: 6828 9170Management Consulting ServicesTah Wee HanEmail: weehan@bdo.com.sgDID: 6828 9184Risk Advisory ServicesWilly LeowEmail: willyleow@bdo.com.sgDID: 6828 9185Tax Advisory ServicesRohan SolapurkarEmail: rohan@bdo.com.sgDID: 6828 9171CORPORATE ALLIANCE PTE LTDCorporate Secretarial ServicesSharon YeohEmail: sharonyeoh@corporatealliance.com.sgDID: 6828 9128Accounting Management ServicesLim Siew MingEmail: siewming@corporatealliance.com.sgDID: 6828 9109BDO LLP19 Keppel Road #02-01Jit Poh Building Singapore 089058Tel: +65 6 8289 118Fax: +65 6 8289 111info@bdo.com.sg | www.bdo.com.sgCopyright © 2011 BDO LLPBDO LLP (UEN: T10LL0001F) is an accountingLimited Liability Partnership registered inSingapore under Limited Liability PartnershipAct (Chapter 163A). BDO LLP is a memberof BDO International Limited, a UK companylimited by guarantee, and forms part of theinternational BDO network of independentmember firms.
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MANAGING PARTNER'S MESSAGE - bdo singapore

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