NZ firms trail global average in cross-border acquisitions

Thursday 10th May 2012

Kiwi firms are lagging behind the global average for cross-border mergers and acquisitions and need to be more active if they are to compete internationally, says Grant Thornton.

Some 24 percent of New Zealand firms are planning to grow through overseas acquisitions in the next three years, below the global average of 33 percent, according to the latest Grant Thornton International Business Report.

That compares with 37 percent of North America firms and 36 percent of those in the UK and Ireland. New Zealand's ranked higher than mainland Europe on 28 percent and the Asia Pacific on 25 percent.

“With our size, geographic isolation and intellectual property, it is imperative that we are above the global average when it comes to cross-border acquisitions," said Martin Gray, head of lead advisory. “Where is the New Zealand strategy to help our companies acquire businesses internationally so that they become more involved in this chain, thereby reaping larger profits?"

New Zealand companies seeking revenue and value growth identified three key areas for attaining these goals, including building scale, accessing new geographical markets and acquiring new technology or establishing brands.

“Just look at how overseas companies are able to come to New Zealand and buy our companies for higher prices," Gray said. "We should spend more time exploring why the price is higher and position ourselves to participate in a greater share of margin throughout the global value chain."

“Strategic acquisitions internationally are an enabler of these goals,” he said.

The research, which interviewed 12,000 businesses worldwide, found that despite on-going economic uncertainty globally, businesses’ appetite for mergers and acquisitions had improved over the past 24 months.

"Domestic M&A remains high on the agendas of business leaders," Gray said. "We just have to make sure that New Zealand companies are part of this growth trend.”

BusinessDesk.co.nz

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