Retailers are pursuing growth through mergers and acquisitions both into and out of China, where deal opportunities are set to continue to grow in the coming years. 2019 got off to a flying start in the first quarter, as the number of retail and consumer M&A transactions increased by 31% year-on-year.
After rapid growth in 2016 and a brief downturn in 2017, M&A in China’s retail and consumer sector rebounded in 2018. The value of M&A transactions reached US$59 billion – an increase of 48% on 2017. The volume of deals climbed 32% to 1,031 transactions.
- Increased consumption brings about new business opportunities
Mounting uncertainties in the global economy and trade environment mean that China will be increasingly dependent on consumer-led growth. On a medium to long-term view, this will continue to drive M&A activity in this sector. We expect activity to steadily increase in 2019.
- Convergence of new and traditional business models triggers further momentum
Digital and bricks-and-mortar business models are converging. This convergence will continue to drive M&A activity in on- and off-line retail areas.
- Private Equity leads the charge
Financial investors (private equity funds) have been increasingly active in M&A transactions in major segments such as online retail; food and beverage; and hotel, dining and leisure. These will continue to be active in 2019.