"The growing power and influence of emerging market economies in the global marketplace, which is reinforced by the findings of this study, has never been more evident as developed economies now firmly rely on their investment, resources, and trade," said Mark Barnes, managing director of KPMG LLP's U.S.-Emerging Markets practice. "Within the last several years, we've seen a broad cross-section of emerging market companies looking to become global players, and gaining a foothold in developed economies is clearly a key part of their growth strategies."
The EMIAT figures show that the number of acquisitions made by emerging market companies in developed economies continues to increase. There were 90 emerging-to-developed (E2D) deals versus 161 developed-to-emerging (D2E) deals. E2D deals represented 56 percent of the D2E total in the first half of 2008 - an increase from the 47 percent and 38 percent registered at the same time one and two years ago, respectively.
In India, outbound deals (51) outpaced inbound deals (17) in the first half of this year. With outbound deals having outnumbered inbound deals for the last three consecutive six-month periods, India seems on its way to becoming a net "deal exporter" in the next EMIAT study slated for early 2009.
"Significantly, this rising inbound investment can pose certain challenges to emerging-market companies looking to expand into the most established economies, such as the United States. Synergies related to supply chain, vendors, systems, financial reporting structures, governance, production and other areas of operations require a properly developed integration plan," said Dan Tiemann, national lead partner for Transaction Services in KPMG LLP, the U.S. firm. He added that the appropriate due diligence and careful consideration to cultural alignment can improve success for acquisitive companies, especially those entering new markets for the first time.
Since the EMIAT study's inception in 2003, the total number of acquisitions made by India-based companies in developed economies (322) is close to surpassing the total number of completed acquisitions that companies from developed countries made in India (340).
"A robust Indian economy and the global ambitions of successful Indian corporations spurred an increase in Indian outbound investment over the past several years," said Arun Kumar, partner in charge of KPMG LLP's U.S.-India practice. "Indian companies are particularly interested in the United States due to its business climate and its large market. In addition, Indian companies see the United States as a source of innovation and expertise."
Among other key survey findings:
- In the past six months, the developed countries making the most corporate acquisitions in emerging market economies included the United States (59), United Kingdom (35), and Germany (16).
- The leading emerging market acquisition targets for companies from developed economies were China (42), Brazil (35), and Russia (32) over the past six months.
- Since 2003, U.S. buyers remain the number one acquirers in India, Brazil and China. The United Kingdom is the leading acquirer in Russia.
