The Rise of Emerging Markets in Mergers and Acquisitions
Developing countries are gaining strength and influence

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he rise in the number of mergers over the past five years has been dramatic. Unlike previous merger waves, however, companies in emerging markets are playing an increasingly important role.
Indeed, while the number of majority acquisitions increased globally by 6 percent, acquisitions of established companies by emerging firms grew at an annual rate of 26 percent. Although their motives differ from traditional M&A activity, it is clear that, in the near term, emerging competitors present a potential threat to companies in developed countries.

Mergers and acquisitions have become a staple of newspaper headlines. Although most M&A activity is initiated by companies in the developed world, a recent A.T. Kearney study of global M&A reveals that a paradigm shift is occurring: Beginning in
2002, deals between developing and developed countries grew at an annual rate of 19 percent— far in excess of the industry average and four times faster than deals conducted within either developing or developed countries alone (see figure 1 on page 2). While not large in absolute terms, this rate of growth indicates how rapidly the developing world is catching up in the M&A business. In fact, the study found that companies from developing countries such as China, India,
Malaysia, Russia, the United Arab Emirates and
South Africa are snapping up established firms at an astonishing rate. Of the 2,168 majority acquisitions between developed and developing

A.T. Kearney

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countries in 2007, almost 20 percent — a total of
421 — were driven by companies from developing countries. Furthermore, this pattern is growing by 26 percent annually. This paper highlights the key findings of the global M&A study, and lays out a strategy