SMEs keen on offshore M&As

The IBR shows 39% of New Zealand’s small to medium-sized companies that are looking to expand plan to do so by cross-border acquisition.

Martin Gray, head of lead advisory for Grant Thornton NZ, says New Zealand was on par with the global average (39%) but the trend was definitely up.

“In the 2012 survey only 24% of New Zealand companies looking to acquire were thinking of expansion through cross-border mergers and acquisitions against global average of 33%. 

“This increase by New Zealand companies is reflection of what has been happening internationally over the last five years where the expectation that cross-border merger and acquisition activity will drive growth has increased 56% since 2008.”

Given NZ’s small size, geographic isolation and need to build its economy on strong access to good intellectual property, Gray says it is imperative that we are above the global average when it comes to cross-border acquisitions. 

“We need to be involved in those parts of the value chain that provide the greatest margin for the value we bring to the table.”

According to the IBR, the main drivers for New Zealand companies to grow through acquisition were:

• to build scale (69% compared with 61% in 2012);

• to access new geographic markets (49% compared with 59%); and

• to acquire new technology or established brands (42% compared with 41%).

The research also showed New Zealand company owners (24%) as the second most likely in the world behind Finland (26%) to sell their businesses in the next three years against global average of 7.6%.

The Grant Thornton International Business Report (IBR) draws on the views and expectations of 12,000 businesses per year across 40 economies.

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