Australia
Melbourne, 4 August 2010

• Australia remains a popular destination for Asian companies targeting acquisition in foreign markets

• North America and South East Asia are key targets for Australian acquirers

Findings from a new global mergermarket survey commissioned by Mercer and Kroll, found that 83% of respondents expect Asian cross-border acquisitions to increase in the next 18 months.

According to the survey, Greater China is the most popular target market for future Asian-cross border M&A with 49% of respondents likely to make an acquisition in Greater China over the next 18 months. North America came in at second place, with 29% of respondents likely to undertake an acquisition there, while South East Asia, India and Australasia followed, with 27%, 22% and 15% respectively. On the other hand, less than 10% of respondents are planning to acquire in Africa (6%), the Middle East (6%), South America (5%), and Western Europe (3%). Japan is the least popular market for Asian buyers, with only 1% of respondents planning to acquire assets there. Meanwhile, Australian companies continue to invest in North America (40%) and South East Asia (33%).

While Asian firms are actively looking to expand their operations into unknown territories, they face a host of potential difficulties, from understanding local labor laws and legislative requirements to assessing the background, reputation and integrity of the target business and its intangible assets.

Mercer, a leading global provider of consulting, outsourcing and investment services, and Kroll, the world’s leading risk consultancy, commissioned mergermarket to produce the report Asia on the Buy Side: The Key to Success. During March and April 2010, 155 senior executives of Asian-based corporations and private equity firms that had undertaken a cross-border acquisition over the past three years were asked about their views on the risk management and human capital issues that impacted the success of their purchase. The report is a summation of the results, with added insights from Mercer and Kroll consultants.

Michael Hill, Head of Mergers and Acquisitions at Mercer, Australia and New Zealand, said that many acquirers in the region are learning valuable lessons from their growing experience.

 “In addition to confirming key trends related to the increasing number of cross-border transactions, the report highlights a growing understanding, on the part of buyers, of the degree of complexity associated with talent retention, compensation, organisational culture and other employee related matters,” Mr Hill said.

“In Australia we are seeing companies place more emphasis on conducting thorough due diligence and understanding the complexities associated with human capital and organisational issues relating to cross border deals. In the past many companies have paid lip service to these issues, but now buyers that want to extract real value from their deals understand that they must pay more attention to these critical issues”.

Only 40% of the Asian buyers surveyed viewed their most recent cross-border transaction as ‘very successful’ or a ‘complete success’.  From pre-deal to post-deal, this report addresses what the successful investors did right and what the unsuccessful investors missed.

Key findings include:

• Respondents remain positive on Asian cross-border deal-making in the foreseeable future with 83% of respondents expecting Asian cross-border acquisitions to increase over the next 18 months; Hong Kong-based respondents are the most bullish with 94% expecting this, whereas 60% of Korean respondents expect the same.

• Organisations from Greater China are investing locally.  Mainland Chinese respondents are likely to target the following regions in the next 18 months: Hong Kong, Taiwan & Macau (68%), North America (28%), India (24%), South East Asia (24%), Africa (8%), Australasia (8%), Eastern Europe & Russia (8%).

• Australian companies continue to invest in North America (40%) and South East Asia (33%).

• Asian cross-border acquirers recognise the importance of HR-related issues with more than 80% believing that intangible assets and cultural differences are important factors to consider during a deal.

• 55% of respondents point to HR-related financial risks as one of the key areas they examine during due diligence as hidden costs such as pension plans and asset liabilities can just as easily derail a deal as cultural issues.

• Asian bidders tend to overlook critical issues that can impact long-term deal success such as, the integrity of key employees (17%), management team’s track record (4%) and exposure to regulatory risks (1%).

To download the full report, please visit: www.mergermarket.com/pdf/MercerKroll_Asian_cross_border_report_Aug_2010.pdf.

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly-owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com

About Mercer's Mergers and Acquisitions business

Mercer’s global M&A consulting business advises clients on transactions, including mergers, acquisitions, joint ventures, initial public offerings, spin-offs, divestitures, start-ups and business transformations. Through our dedicated, experienced M&A consultants deployed in more than 40 countries, we help clients realize the value of their deals through their people. At each stage, from pre-target through integration and execution, Mercer partners with each client to bring clarity to the business context; to provide analytical support and proprietary tools for all people-related policies and programs; to provide guidance in managing and deploying the workforce; and to ensure that business goals are met. To learn more, visit www.mercer.com/mergers-acquisitions.