72% of Domestic Company CEOs Have M&A Plans This Year... M&A Interest Hits Record High

'EY 2022 CEO Outlook Survey' Report Released
Record High Number and Volume of Domestic and International M&A Deals in 2021
Additional M&A Expected This Year to Secure Corporate Growth Engines

[Asia Economy Reporter Hyungsoo Park] As we enter the post-COVID-19 era, the majority of chief executive officers (CEOs) are expected to actively pursue investments and mergers and acquisitions (M&A) to secure growth engines.

According to the ‘EY 2022 CEO Outlook Survey’ report released on the 9th by global accounting and consulting firm EY Hanyoung, which surveyed over 2,000 CEOs worldwide, about 43% of respondents?nearly half?said they plan to pursue bolt-on acquisitions, which are small-scale M&As within the same industry aimed at increasing market share. This was followed by strengthening operational capabilities (36%) and acquiring technology, talent, new production capabilities, or startups (9%).

Despite the prolonged COVID-19 pandemic, last year’s global M&A market recorded an all-time high in both the number of deals and deal value. A total of 5,359 deals were completed last year, with a total transaction value reaching $5.4452 trillion (approximately 6,777 trillion KRW). The domestic M&A market also surpassed $47.7 billion (about 59 trillion KRW), a 21% increase from the previous year, marking the largest scale ever.

The M&A market momentum is expected to continue this year as well. According to the survey, 72% of domestic CEOs responded that they plan to actively pursue M&A this year, a 23 percentage point increase from 49% last year. This is the highest response rate recorded for the same question over the past decade. Compared to the global average response of 59% and the Asia-Pacific regional average of 54%, domestic M&A activity is expected to be vigorous.

Domestic respondents identified the top five target countries for future acquisitions as South Korea (32%), China (25%), Germany (14%), the United States (12%), and India (8%). Overseas respondents preferred the United States (47%), the United Kingdom (16%), China (15%), India (13%), and Germany (9%) in that order. Among domestic companies, those in the manufacturing, financial services, and automotive & transportation industries were expected to be the most active in M&A this year. Globally, the top three most active industries were telecommunications, technology, and healthcare.

As M&A plans gain momentum, competition in the domestic M&A market is expected to intensify. When asked about this year’s M&A market trends, domestic respondents cited ▲an increase in hostile and competitive bids (26%) ▲growth in cross-sector (inter-industry) deals (25%) ▲rise in private equity (PE)-led acquisitions (18%) ▲increase in regulations or government interventions (17%) ▲growth in cross-border transactions (14%). Global respondents showed similar response levels.

Choi Jaewon, head of EY-Parthenon at EY Hanyoung, said, "While the domestic and international M&A markets enjoyed a boom last year, companies are expected to focus on integrating recently acquired assets this year." He added, "At the same time, additional acquisitions to secure growth engines will be actively pursued."

He further advised, "As competition in the M&A market is expected to intensify, CEOs need acquisition strategies that consider long-term growth and value, rather than short-term gains."

This content was produced with the assistance of AI translation services.