07 April 2016
DOHA: The appetite for mergers and acquisitions (M&A) will increase both globally and regionally. Similar trend is seeing in Qatar as well, a KPMG report says.
Globally, the appetite for M&As and the capacity for businesses to enter into and fund deals will increase during FY16 by 4 percent and 13 percent, respectively as compared to FY15. The positive outlook is mirrored across the Middle East, with an expected increase in M&As of 3 percent and the capacity to fund deals increasing by 18 percent. In Qatar, KPMG is seeing similar trends - with increases in the number of M&As.
Looking at cross border deals, developed market investments into emerging markets hit a 10-year low, but deals among emerging market show strong growth with deals in the Middle East and North Africa up significantly.
Hady Kotry (pictured), expert in M&As at KPMG in Qatar said: "There are a number of socio-economic reasons that are likely to have contributed to the increase in deals. Over the past few years, we have seen recession hitting some countries, unexpected fluctuations in commodity prices and the huge need for businesses to keep up with ever-developing technology. These factors have seen an increasing number of businesses folding and unable to adapt to new market conditions. With high GDP and effective government planning, Qatar has been relatively well protected from this."
Current economic conditions have resulted in greater complexities for businesses who need to access funding. Banks need to meet increasingly restrictive regulations like Basel III and do not want to risk high non-performing loan ratios. It is therefore becoming necessary for business owners to explore alternative ways to raise capital including, mergers, aligning with a strategic partner and initial public offerings (IPOs).
There are various factors in Qatar, which are likely to be supporting the growth in deals. The expected launch of the SME index in Qatar Exchange, accompanied with QDB's ongoing support for SMEs and family businesses to grow their organisations, with a view to listing is certainly bolstering this sector.
Similarly, the government is supporting the private sector with diversification, helping many businesses identify and undertake new commercial opportunities, both locally and overseas. Deals being made with businesses out of the country are also on the rise as Qatar based businesses are realizing the long-term benefits of the current decreases in the global share prices affecting some markets.
In line with these global shifts, Qatar is seeing an increasing pace of demand for due diligence services, with clients looking to the firm to identify any potential issues prior to investing in, merging with or purchasing a business.
Kotry added: "M&As are a critical tool for achieving growth, and the increase in due diligence requests from clients in Qatar is a positive sign that the country's businesses are not only planning more deals and investments but are taking a long-term view to these. Accumulated, exaggerated business valuations can lead to serious implications in tough economic times. So having a clear, accurate understanding of business with which you intend to merge, acquire or invest in is vital."
DOHA: The appetite for mergers and acquisitions (M&A) will increase both globally and regionally. Similar trend is seeing in Qatar as well, a KPMG report says.
Globally, the appetite for M&As and the capacity for businesses to enter into and fund deals will increase during FY16 by 4 percent and 13 percent, respectively as compared to FY15. The positive outlook is mirrored across the Middle East, with an expected increase in M&As of 3 percent and the capacity to fund deals increasing by 18 percent. In Qatar, KPMG is seeing similar trends - with increases in the number of M&As.
Looking at cross border deals, developed market investments into emerging markets hit a 10-year low, but deals among emerging market show strong growth with deals in the Middle East and North Africa up significantly.
Hady Kotry (pictured), expert in M&As at KPMG in Qatar said: "There are a number of socio-economic reasons that are likely to have contributed to the increase in deals. Over the past few years, we have seen recession hitting some countries, unexpected fluctuations in commodity prices and the huge need for businesses to keep up with ever-developing technology. These factors have seen an increasing number of businesses folding and unable to adapt to new market conditions. With high GDP and effective government planning, Qatar has been relatively well protected from this."
Current economic conditions have resulted in greater complexities for businesses who need to access funding. Banks need to meet increasingly restrictive regulations like Basel III and do not want to risk high non-performing loan ratios. It is therefore becoming necessary for business owners to explore alternative ways to raise capital including, mergers, aligning with a strategic partner and initial public offerings (IPOs).
There are various factors in Qatar, which are likely to be supporting the growth in deals. The expected launch of the SME index in Qatar Exchange, accompanied with QDB's ongoing support for SMEs and family businesses to grow their organisations, with a view to listing is certainly bolstering this sector.
Similarly, the government is supporting the private sector with diversification, helping many businesses identify and undertake new commercial opportunities, both locally and overseas. Deals being made with businesses out of the country are also on the rise as Qatar based businesses are realizing the long-term benefits of the current decreases in the global share prices affecting some markets.
In line with these global shifts, Qatar is seeing an increasing pace of demand for due diligence services, with clients looking to the firm to identify any potential issues prior to investing in, merging with or purchasing a business.
Kotry added: "M&As are a critical tool for achieving growth, and the increase in due diligence requests from clients in Qatar is a positive sign that the country's businesses are not only planning more deals and investments but are taking a long-term view to these. Accumulated, exaggerated business valuations can lead to serious implications in tough economic times. So having a clear, accurate understanding of business with which you intend to merge, acquire or invest in is vital."
© The Peninsula 2016
