News from Cass Business School

Cass M&A research signals the emergence of Asia

First of its kind index illustrates country’s ability to attract and sustain M&A activity

Wednesday, 15 December, 2010

The Mergers and Acquisitions Research Centre at Cass has produced a unique index which provides the most accurate available picture of the global M&A market. The MARC Maturity Index assesses and ranks the maturity of 175 countries for M&A activity. The report provides a good indication for which regions will be the M&A stars of 2011.
The traditional bases for M&A activity, such as the UK, US and Japan, unsurprisingly top the rankings. However, among the notable successes are countries such as Malaysia, Israel and Chile who all appear in the midtwenties. These strong results are often linked to particularly distinct features. For example Chile, ranked 26th, has a MARC score of 1.4 (94%) for political factors, a score equal to that of the UK and US.
One of the more counter-intuitive findings from this study is that more M&A deals tend to occur when political instability is high, but only in the transitional markets. However, political environment and technological development have virtually no differentiating effect on M&A at the mature level where socio-cultural factors are critical drivers. 
Outside of North America and Western Europe Asia emerges as the most favourable region for M&A activity. South Korea, Singapore and Hong Kong score on par with Australia and Germany, evidence that they have reached the mature stage for M&A activity.
Despite its recent growth and economic might the Cass MARC Index shows that China’s M&A market is far from reaching its full potential. A more detailed examination of the data shows that while China scores well on most criteria their scores for political stability and regulation are 3.0 (50%) and 3.3 (40%) respectfully, which explains that while they are classified as a mature market their score positions them in with the highest rankings of transitional market countries.
The study, which is sponsored by Allen & Overy, Credit Suisse and Ernst & Young assesses the risks and opportunities present in territories across the world based on six factors; economic, financial, political, regulatory, socio-cultural and technological. Each category has a number of sub factors, weighted to provide an overall 'MARC Maturity Index' score.
Co-author of the study and Director of MARC, Professor Scott Moeller, said: "The Cass MARC M&A Maturity Index provides a robust illustration of M&A maturity on a country level and can function as practical starting point for discussion around deal-making in lesser known markets. As we update this study annually we’ll begin to see patterns emerge and it will be possible to track regional M&A maturity overtime.
"The index shows the cast potential for non-traditional markets for acquisitive companies. It will be exciting to see how the scores change over time."
Ernst & Young have produced an online tool using the data from this study.
The Cass Talks interviews are an opportunity to hear Cass faculty and prominent alumni give their perspective on current business and finance news stories, global issues affecting the business world and new research coming out of the School. Listen, watch and download Cass Talks and see other Cass academics share their opinions at:

Permanent link to this story:
Share this article