Privately held businesses plan strategic growth

An increasing number of privately held businesses (PHBs) are planning to grow through acquisition, according to the Grant Thornton International Business Report (IBR), which provides insight into the views and expectations of over 11,000 businesses per year across 39 economies. In its latest global study conducted at the end of 2010, the proportion of respondents anticipating making an acquisition in the next three years increased to 34% this year, an increase of 8% compared to twelve months ago.

Mike Hughes, global leader - mergers and acquisitions for Grant Thornton International, explains: "At a time of improving economic and financing conditions, businesses are again looking towards acquisitions as a means of growing revenues as they shift their mindset from survival to strategic growth."

PHBs in the BRIC economies (Brazil, Russia, India and China) are among those leading the way with 44% of respondents considering an acquisition, compared to 27% in 2010. Driven by the desire to access new markets and acquire new technology or established brands, 45% of businesses in mainland China plan to grow through acquisition, an increase of 19% over 2010.

Likewise, Indian companies, which are well experienced in dealing with overseas M&A markets, are now back on the acquisition trail, with 40% of those planning an acquisition in the next three years expecting their deals to be cross border.

Mahad Narayanamoni, M&A partner with Grant Thornton India, believes this reflects a coming of age for Indian businesses: "Indian companies are now more experienced in dealing with overseas M&A transactions and are considered serious contenders for acquiring global businesses. Acquiring global brands, gaining access to overseas markets and leveraging new technologies for Indian markets are some of the key drivers for outbound acquisitions by Indian companies."

An increase in planned M&A activity is also reflected in the results from the other major regions. For example, in North America, 41% of the region’s PHBs are planning acquisitions. Stephen McGee, national practice leader of corporate finance at Grant Thornton US, explains: "After two slow years, with an improving economy and easing credit market, there is considerable pent-up demand for acquisitions."

Grant Thornton member firms offer specialist M&A advice in every important trading centre in the world, a Grant Thornton report said.