• Strong M&A growth supported by the strength of Thai businesses expanding nationally and globally, increased investment from Private Equity funds, and strategic corporates still seeking new markets and value
• Thai businesses can take advantage of this trend by seeking JV Partners or alliances
• Failure to negotiate due diligence findings cited as the main factor for deal failures in Thailand, says KPMG
• Firms need to focus on managing culture differences in M&A, says KPMG
• Future is bright for Thailand M&A landscape 

Bangkok, 12 January 2019 – A survey by KPMG of companies who have been engaged in M&A activity in Thailand shows that key players maintain a strong appetite for more deals, and Thailand is well-placed to take advantage of a global demand for acquisitions. The survey also highlighted the key challenges and positives from recent M&A deals in Thailand, both successful and unsuccessful, and therefore provides valuable learning points for businesses who are considering either buying, selling or setting up a joint venture with another business.

In a global climate where CEOs are consistently looking at M&A, strategic alliances and partnerships as a key priority for growth, Thailand has seen an increase in M&A activity over recent years. This has been fueled not only by the traditional, long-standing sources (small-to-medium sized domestic M&A and primarily Japanese foreign direct investment), but also by a marked increase in investments from Private Equity funds, multi-national corporations from all over the globe, and significant domestic and outbound investments from an increasingly large number of Thai conglomerates who are transitioning into truly global enterprises.

Particularly important has been the increase in private equity fund investments, from both local and regional funds who are looking at Thailand and focusing mainly on smaller and early-stage investments, to the giant global funds looking at transactions in the hundreds of millions of dollars. Similarly, strategic corporates from around the world continue to see Thailand as an attractive destination for manufacturing, but primarily in order to access new markets, customers and technology: two-thirds of the companies surveyed stated that expanding their market was a key motivation for pursuing M&A.

The respondents also stated that Thailand will continue to remain a key market for further M&A activity in the near future, with 88% stating that they expect to do at least one more deal in Thailand in the next five years, and 27% expecting to do at least four deals. They also showed that Thailand remains a more attractive destination for M&A than other emerging Southeast Asian nations, with only Vietnam seeming to challenge Thailand in terms of attractiveness.

The study also highlights the main problems and obstacles encountered when pursuing M&A in Thailand, and importantly also focuses on why unsuccessful deals fell through. By understanding and learning from these challenges, both sellers and investors will be able to better prepare and navigate the M&A process. 

Not surprisingly, the main challenge encountered was how to overcome issues identified during due diligence, with legal issues, tax risks, and lack of quality and integrity around financial records the most common recurring issues. KPMG state that many of these issues can be mitigated by the sellers preparing for a deal earlier in the process so investors can more easily get a rounded understanding of the real financial, commercial and legal status of the business, and structure deals accordingly. KPMG note that they are working with both buyers and sellers much more often and much earlier in the process now than in previous years, which significantly increases a deal’s chance of success.

The main post-deal challenges highlighted are related to cultural and management differences (71%), alignment of business strategies (54%), and implementing change (43%). These high numbers are perhaps not surprising given that over half of the businesses surveyed did not do any significant planning for the post-deal integration of the two businesses. One of the key takeaways from the study is that thinking about, preparing for and formally planning for day 1 and at least the first 100 days post-completion, significantly increases the chances of a successful deal.

With these M&A trends in Thailand expected to continue in the current age of disruption, a wait-and-see approach may no longer be sustainable. Business in Thailand should therefore take advantage of these trends, and whilst it may not yet be a case of eat or be eaten, being aware of the pitfalls and opportunities of M&A, and preparing for either buying, selling or partnering with other businesses, should be a part of the Board’s agenda.

View and download the full version of Doing Deals in Thailand booklet.

This publication is an in-depth survey and interview of the M&A landscape in Thailand. Executives and M&A specialists across all industries were surveyed and interviewed. KPMG in Thailand’s senior Deal Advisory experts also share their perspectives on the M&A market and its outlook.

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG in Thailand, with more than 1,700 professionals offering audit, tax, and advisory services, is a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Ploi Phayakvichien  
Tel: 02 677 2034
ploi@kpmg.co.th