A joint survey by PwC Taiwan, and the Taiwan M&A and Private Equity Council highlights a concerning trend: China's M&A market has seen a consistent downturn over the past four years.
The transaction value and volume have plummeted by 28%, with the total value now just 23% of its 2015 peak. This decline is accompanied by a notable drop in acquisition interest from both foreign and Taiwanese firms.
PwC's data further underscores the bleak outlook. In 2023, the global M&A market's total transaction value fell by 27% from the previous year, with the number of deals declining by 19%. This downturn is attributed to various factors including geopolitical tensions, the erection of high-tech barriers by nations, central banks maintaining high-interest rate policies, and overarching economic recession fears.
Interestingly, the decline is not uniform across regions. PwC points out that North America's M&A transaction value saw a relatively modest drop in 2023. In contrast, Europe, Asia, and South America experienced declines exceeding 20%.
In stark contrast, Taiwan's M&A landscape is thriving. The island saw 131 M&A transactions in 2023, reflecting a 12% year-on-year growth and marking the third consecutive year of record-setting activity.
The momentum continues into 2024, with 43 transactions already recorded in the first quarter, suggesting another potential record year. This surge indicates that Taiwanese companies are aggressively pursuing M&A to swiftly gain technological advantages, enhance product offerings, and secure stronger market positions.
However, Taiwan's M&A activity, despite its growth, still trails behind regional powerhouses like South Korea and Singapore. For instance, South Korea's GDP was about 2.3 times that of Taiwan's in 2023, yet its M&A transaction volume was five times higher. Similarly, Singapore, with a GDP of only 70% of Taiwan's, boasted 3.5 times more M&A transactions.
The survey also reveals shifting investment preferences, with a reduced appetite for Chinese ventures and a growing interest in European and Southeast Asian markets. Over 70% of Taiwanese companies are bullish on the M&A market for 2024, with more than half expecting a significant increase in transaction values. In addition, nearly 70% of respondents underscore the critical role of talent in M&A, with over 80% highlighting talent retention as one of the most pivotal issues in such deals.
