Appeals by stockholders for an increase in the value of their holdings have prompted a slew of large corporate stock buybacks on the one hand but also resulted in executives feeling obliged to drive value through expansion.

“The quickest way to grow market share and revenue is to add that of your rivals to your own,” said Linda Robeson, senior Vice-President of Corporate Financing at Acquisition International. “Moreover, money is still incredibly cheap so it makes sense for a company looking to expand and drive shareholder value to borrow what it needs to make the purchase.”

Despite its findings, Acquisition International says that the low interest rate environment in isolation hasn’t been enough. “There had to be evidence that the economy was improving to justify the risk of approaching rivals,” explained Robeson.

Asia Pacific markets, however, have relied less on cheap money owing to the rising strength of the US dollar over the last 2 years. Many Asian companies have found that the cheap money they borrowed in US dollars 3 or 4 years ago has become increasingly more expensive to repay as the local currencies in which their revenues are denominated fall against the greenback.

“We expect activity in Asian markets to moderate next year but any surprises from the US Federal Reserve in December could see a reversal of the strong dollar trade and a strengthening of local currencies that could result in an explosion in M&A activity,” concluded Robeson.

About Acquisition International:
Acquisition International is an international M&A firm focused on selling privately-held middle-market companies with transactional values ranging from $5 million to over $100 million. Headquartered in the Tokyo, with offices across the Americas, Europe and Asia, our highly experienced dealmakers have collectively closed over 500 transactions across a wide spectrum of industries. Acquisition International specialise in integration and separation programmes assisting clients through a host of major acquisitions over the last 10 years. We work closely with our clients in order to tailor our approach accordingly and meet their unique requirements.