Smaller firms wary of mergers, listing

The Nation

"It may be another indicator of a lack of confidence in the Thai economy, consistent with earlier survey results, or a more fundamental concern about their ability to pull off a complex acquisition transaction," Peter Walker, senior partner of the local unit of Grant Thornton International, said recently.

"Of course we do see M&A activity in the publicly traded companies and with multinational companies investing in Thailand. But, Thai privately held businesses are largely dominated by small local businesses and these companies are indicating through the survey that they are not planning an acquisition growth strategy at this time," he said.

Globally, 44 per cent of privately-held businesses are planning to grow through acquisitions in the next three years and 23 per cent of them anticipate a cross-border deal, according to the International Business Report published by Grant Thornton.

The owners see domestic and international M&A as a key strategic tool to drive growth.

Businesses in fast growing economies like Brazil, Russia, India and China are now embracing M&A, with 59 per cent of businesses in those countries reporting an anticipated acquisition within three years. The rates are also high in Malaysia, Hong Kong and Vietnam, at 36 per cent, 29 per cent and 29 percent.

The IBR survey also looked at privately held business owners' plans to undergo a public listing of their company within three years.

Globally, 22 per cent plan to undergo a public listing within three years despite the international financial turbulence. The top four countries were China at 60 per cent, India and Malaysia at 37 per cent and Vietnam at 30 per cent.

Continuing Thailand's trend of reduced confidence, only 1 per cent of private business owner respondents here said that they had plans to list in the period.

"The response from Thai private business owners reflects both pessimism about the overall economy and a concern about the complexities, risks and exposure of taking a company public in this country," Walker said.

"Three clear messages can be seen in these survey results," he said.

"Firstly, Thailand's government and business leaders need to work much harder to internationalise the country's business practices and leadership capabilities.

"Secondly, more government action is required to boost business leaders' confidence in the economy.

"Finally, the regulations for listing smaller companies need to be improved to encourage businesses to grow through public listing.

"Maybe the regulations governing Thailand's MAI (Market for Alternative Investment) could follow a similar approach to the very successful AIM in London, where the effort, risk and cost of listing has been significantly reduced through innovative listing policies."