India Inc's overseas M&A appetite ebbs, says Mergermarket

MUMBAI: Domestic companies are missing out some of the opportunities in mergers and acquisitions (M&A) space and deal size have come down, according to a research report.

This is stated in a report titled ' Globalising Human Capital in Outbound M&As', by Mergermarket, an independent M&A intelligence service released here.

The report said while the country's share of the outbound investment pie has declined in recent years as such deal flows has slowed, outward investment from other Asia-Pacific countries have gone up.

Recently, domestic companies have made smaller acquisitions outside of Asia-Pacific spending USD 1.9 billion in 28 deals in H1 of 2012, for an average deal value of USD 68 million, the report said.

"There are lot more opportunities knocking the door for M&As for domestic companies. Although there are lot of cash stress in companies' balance sheets, M&As are likely to improve," AZB Partners partner Abhijit Joshi said.

Key finding in the report notes that domestic companies may struggle when buying abroad as their management styles are often different than those in other global markets, especially developed markets.

Domestic companies have long been buying abroad, though ambitions have waned in the post-financial crisis period, it said.

Outside the Asia-Pacific belt, domestic companies have primarily targeted North America and Western Europe.

While the deal size has come down, the report said these companies had pursued some mega deals, particularly in the boom years of the mid-2000s, conducting 11 deals valued above USD 1 billion between 2006 and 2008.