Press releasePress release issued by Ernst & Young
Globalization on the rebound despite national tensions (23 Jan 2011)
LONDON AND DAVOS, 24 January – A report released today by Ernst & Young in cooperation with the Economist Intelligence Unit (EIU) shows that, after a brief pause in 2009 and a modest rebound in 2010, the world’s 60 largest economies will continue to globalize steadily between now and 2014, driven by the continued global economic recovery, technological innovation and the rise of the emerging markets.
Winning in a polycentric world also highlights the tension between the flattening effect of globalization and significant variations across international markets. While the former encourages companies to roll out business and operating models globally, differences between markets will demand a more localized approach.
The report draws on two sources of original research: Ernst & Young’s Globalization Index, which measures the world’s 60 largest economies according to their degree of globalization relative to their GDP, and a survey of more than a thousand senior business executives worldwide, conducted in late 2010, canvassing their thoughts on globalization.
Globalization and economic growth
The speed with which different parts of the world are recovering from the economic downturn, and the subsequent policy responses they are making, is undoubtedly placing some stress on globalization but, as our index and survey suggest, those are temporary concerns and the long-term trend continues to be for closer integration. James S. Turley, Chairman and CEO of Ernst & Young, comments, “The enormous opportunities in emerging markets, the ever increasing power of technology and a gradual international economic recovery will ensure that globalization continues to deepen over the coming years. That said, it is incumbent on business and governments to continue to make the case for globalization as a positive force for economic and social good and avoid any descent into protectionism.” What does it mean for business? The future challenge for business will be to strike the balance between these opposing forces of globalization and national markets and achieve both scale and local relevance. John Ferraro, Chief Operating Officer of Ernst & Young, explains, “Business opportunities are now distributed more evenly around the world than at any time in history. The convergence of market potential between the developed and emerging world means that the number of markets that multinationals must consider as “strategic” has increased.
“But, at the same time, the nature of the opportunities in those markets can be fundamentally different. In the developed world, companies have well established business models and asset bases but face weak growth prospects. In the emerging economies, this situation is often reversed.”
Companies must now operate in a “polycentric world” in which there are multiple but divergent spheres of influence in both developed and developing markets. It is not just opportunities that are located in these multiple centers. Competition, capabilities and resources can all now reside anywhere in the world and travel in new, sometimes unexpected directions. Long-term winners?
Turley explains that to be a long-term winner in this new globalized world, “multinationals must essentially operate at multiple speeds in order to fit their strategies to both fast-growth and slow-growth markets. Success in the former requires rapid-fire decision-making and the capacity to experiment, learn and scale at speed. For large multinationals, this may require a re-think of reporting lines in order to bypass bureaucracy and maximize agility. Developed markets, on the other hand, will require a different approach, which is more dependent on efficiency and incremental growth.” To succeed in a polycentric world requires companies to focus on four priorities as Turley concludes:” Corporates will have to first redefine global and local, second develop a “polycentric” approach to innovation, third rethink relationships with government and tax administrations and fourth build leadership teams with strong global experience.” Where are we today?
Our survey of over a thousand business leaders suggests a mixed picture in how far corporates were currently engaging with these four priorities Business is certainly getting more international in its aspirations. Nearly 70% of those surveyed said that their foreign direct investment (FDI) would increase in the next three years. Seventeen per cent of respondents said FDI would increase by more than 20%.
The executives are already re-thinking their approach to innovation in emerging markets. Currently, the companies in our survey conduct a relatively small proportion of their R&D in emerging markets, despite the importance of these economies to their growth prospects, with only 16% of respondents saying that more than one-quarter of their R&D expenditure is invested in emerging markets.
But, over the next five years, this picture will change. The proportion of respondents that will conduct more than one-quarter of their R&D in emerging markets will almost treble in Western Europe and more than double in North America. Nearly 30% of companies will spend more than a quarter of their R&D investment in emerging markets five years from now.
Understanding the political environment, and how it might affect the company’s ability to do business, has become a core competence for global corporates. And yet, according to our survey, companies pay a relatively small amount of attention to policy as part of their investment decisions. The only aspects of government policy that more than half of respondents consider to be influential when planning an investment are economic growth projections and tax rates.
Finally, on the need to build leadership teams with strong global experience, respondents to our survey generally share this view. Just over half agree that there is a link between diversity of teams and experience, and superior reputation and financial performance. Only 15% think that diversity does not have a positive impact on either reputation or performance.
-ends- About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topM&A Maturity Index signifies the emergence of Asia (14 Dec 2010)• South Korea, Singapore and Hong Kong on par with Australia and Germany
• Malaysia, Israel, Czech Republic and Chile in surprise upper-table ranking LONDON, 14 DECEMBER - A new study from the Mergers and Acquisitions Research Centre (MARC) at Cass Business School, which is part of City University London, finds that Asia is emerging as the most favorable region for global M&A activity outside the traditional Western markets. The MARC M&A Maturity index, sponsored by Ernst & Young, assesses and ranks the maturity of 175 countries for M&A activity. The traditional bases for M&A activity, such as the Canada, UK, US and Japan, unsurprisingly top the rankings. However, among the notable successes are countries such as Malaysia, Israel and Chile and these strong results are often linked to distinctive features; for example, Chile, ranked 24th, has a score of 1.4 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 transitional markets. However, the political environment and technological development have virtually no differentiating effect on M&A in mature markets where socio-cultural factors are critical drivers. Outside North America and Western Europe, Asia emerges as the most favorable 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 index shows that China’s M&A market is yet to reach its full potential. A more detailed examination of the data shows that while China scores well on most criteria, those for political stability and regulation are 3.0 and 3.3 respectively, demonstrating that although it is classified as a mature market, its score positions it in within the highest rankings of transitional market countries. Alexis Karklins, Capital Transformation Leader at Ernst & Young says: “It is no surprise that the most mature markets are those that have traditionally played the biggest part in M&A transactions. However, Malaysia, Israel, the Czech Republic and Chile all appear in the top end of table in the rankings. These nations are boosted by rather distinct factors. Malaysia scores best in economic and financial factors. Israel leads in the technological arena, the Czech Republic in the socio-cultural arena and Chile in political factors. These states lead the BRIC countries that are typically mentioned in analysis concerning major emerging markets, though the smaller size of the countries and their markets is an added factor for their success.” Of the BRICs, China tops Brazil, India and Russia in the M&A maturity rankings. The study 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 score on a scale of one to five; with one being fully mature for M&A purposes. The index has a 0.81 correlation with M&A activity; more than double that of the World Bank Group’s ‘Protecting Investor Index’, which has a correlation of just 0.30. Karklins continues: “As some measure of stability returns to the markets, M&A is an increasingly important tool for companies wishing to win the competition for growth. For many, this will involve examining new markets as the source of acquisitions. The challenges here are around familiarity with local risks and opportunities. Investors often talk about the BRICs as one “group”. There are however marked differences between the economic climates in Brazil and Russia and the cultural nuances in India and China. Successful M&A transactions are all about understanding and valuing the risks and opportunities of the deal. Investors would do well to understand these before embarking on transactions.” Co-author of the study and Director of MARC, Professor Scott Moeller, says: “The Cass MARC M&A Maturity Index provides a robust illustration of M&A maturity on a country level and can function as a 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 over time. “The index shows the potential for non-traditional markets for acquisitive companies. It will be exciting to see how the scores change in the future.” - ends - About Ernst & Young
About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
Back to top2010 global IPO fund raising to exceed historic peak in 2007 (8 Dec 2010)Asian issuers raise the most capital ever, accounting for nearly 2/3rds of total global IPO proceeds 90% of listings priced within or above their initial filing range Q4 2010 to achieve the highest quarterly fundraising value on record
LONDON, 8 December – IPO fundraising activity will set record levels globally in 2010 with funds raised likely to exceed US$300billion. Despite the fragility of economic recovery in Western markets, Asia’s economic growth story and record-breaking debuts have fuelled a strong worldwide IPO recovery. In the first 11 months of 2010, IPOs worldwide have already raised US$255.3b in 1,199 deals. By year end, total global IPO values will exceed the previous record (of US$295b raised in the global fundraising peak of 2007), according to Ernst & Young’s Year-end Global IPO Update. The fourth quarter in 2010 will also reach the highest quarterly IPO value on record (surpassing the US$104.8b raised in Q4 2007). This record will likely be achieved, since in Q4 2010, global IPO value has already reached US$102.8b through 294 deals, and in December, 82 further deals worth a minimum of US$16.9b are currently expected. Asian issuers raised the most capital ever In the first 11 months of 2010, Asian issuers have raised the most capital ever, with US$164.5b raised so far (already outstripping the US$98.2b raised in Asia’s peak fundraising year of 2006). Asian issuers make up 64% of total global IPO value so far in 2010. Ranking second, North American issuers raised US$40b in 168 deals, while European issuers raised US$32.8b in 211 IPOs and the Middle East & Africa US$5b in 47 IPOs. Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says:
“Benefiting from relatively low interest rates in developed markets and abundant liquidity, global investors in the last 11 months have been avidly seeking exposure to the growth in Asia and other emerging markets. This trend is expected to continue.” Profiting from China’s strong GDP growth and market liquidity, Greater China issuers dominated, making up over 46% of global IPO value (US$117.9b in 442 deals, a 170% increase in total values from the same time period in 2009). Except for the US, which ranked second to Greater China, the top 6 markets for fundraising were all Asian: Japan, India, South Korea, and Malaysia.
Top 3 mega IPOs made up of 25% of global funds raised in 2010
The US$22.1b mega privatization of the Agricultural Bank of China was the world’s largest IPO ever, and made up 9% of total IPO value globally this year. These proceeds surpass the US$21.9b raised by the previous IPO record holder, of another Chinese state-owned bank, ICBC. The fourth quarter of 2010 saw both the second and third largest IPOs of the year: the US$20.5b IPO of the Asian life insurance unit, AIA Group Ltd. in Hong Kong, in a spin-off of US insurance corporation, the American International Group, and the US$18.1b privatization of US automobile manufacturer General Motors after a historic bail-out by the US government. Together, these top 3 deals made up around one quarter of the total capital raised in 2010.
Two-thirds of US listings are backed by PE and VC firms US exchanges raised 15% of global proceeds, or a total of US$39.5 billion in 143 deals. This represents a 58% increase in value from the same period in 2009. PE and VC sponsored deals made up 68% of US new issuances, with 75 deals worth US$13.2 billion.
European fundraising surges 526%, led by Poland and UK
In Europe so far, the first 11 months of 2010 saw a massive 526% increase in capital raised from the same time period in 2009. Despite market volatility exacerbated by the euro zone sovereign debt crisis, European exchanges launched 223 IPOs worth US$32b. Polish exchanges launched the second highest number of IPOs globally with 81 deals worth US$4.8b. UK exchanges led Europe in fundraising with US$10.1b raised in 50 offerings.
Price-challenged sponsor-backed IPOs make a comeback
“Under pressure to release capital to investors and with limited access to credit, PE firms looked to public markets as an exit option, often accepting discounted valuations,” says Ericksen. Globally, PE firms exited 139 companies via IPO, raising around US$33.1b or (12.9% of total funds raised), while VC backed firms exited 102 companies through an IPO, worth US$10.7b (4.2%). The largest PE-backed IPO was Denmark’s jewellery manufacturer Pandora, with a US$2.1 billion offering.
Almost 9 out of 10 global IPOs priced within their initial filing range
While price-sensitive investors grew more cautious after mixed performances of some high-profile debuts, 86% of global IPOs in the first 11 months of 2010 priced within their initial filing range -- compared to a historical 10 year average of 74.3%. Only 11% of IPOs priced below their initial price, while 3% priced above.
Financial and infrastructural companies were most active
The top three sectors accounted for 63% of total value: financials (US$ 74.9b), industrials (US$52.7b) and materials (US$34.8b). The leading sectors by number of deals were materials (254 IPOs); industrials (208); and high technology (160).
Continues Ericksen: “Asian insurance companies and banks drove global IPO markets, while the high level of activity by industrial and materials companies reflects the focus by emerging market governments on modernization of their infrastructure".
Greater China exchanges achieve record highs for fundraising
The Hong Kong Stock Exchange, buoyed by the Agricultural Bank and AIA listing, dominated global IPO markets in 2010. The HKEx raised US$ 61.2 billion in 74 IPOs (24% of global proceeds). Shenzhen Stock Exchange ranked second, raising US$40b (15.7%), while the New York Stock Exchange came in third raising US$31.1b (12.2%). Ranking fourth, Shanghai Stock Exchange raised US$15.9b (6.3%). Due to demand for Chinese high growth companies and attractive pricing, Shenzhen was the most active by number of deals, with 288 deals (24% of total numbers). HKEx saw 74 deals (6.2%) ,and the NASDAQ and New York Stock Exchange hosted 70(5.8%) and 69 deals (5.7%) respectively. “Despite market uncertainty, new IPO filings continue to increase around the world and a large backlog has built up as companies await greater macroeconomic stability. Therefore we expect the current IPO momentum to continue its upward trend in 2011.” says Ericksen.
-ends- About the report
Ernst & Young’s Year-end Global IPO Update covers global IPO activity from 1 January to 30 November 2010.
About Ernst & Young’s IPO offering Ernst & Young thrives on helping companies to deliver successful initial public offerings (IPOs). Our strategic growth markets professionals, who are dedicated to serving future market leaders worldwide, help businesses like yours evaluate the pros and cons of an IPO. We demystify the process, examine the alternatives and help prepare you for life in the public spotlight. On average, we help a company go public every business day of the year. Our market-based insights and landmark IPO retreats, held in every major market worldwide, can help your business achieve its potential. It’s how Ernst & Young makes a difference. About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 135,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
Back to topChina dominates Q3 global IPO activity (6 Oct 2010)- US and European IPO markets remain volatile
- First three quarters of 2010 IPO activity exceeds total year 2009 levels
- 9 in 10 global IPOs price within or above their initial filing range
LONDON, 6 October 2010 – Global IPO fundraising picked up in Q3, despite market volatility and fewer deals launched. Asia’s growth story continues to fuel global IPO markets. The US$22.1b mega IPO of the Agricultural Bank of China was the largest ever, making up almost half (42%) of total IPO funds raised globally this quarter.
In third quarter global IPOs raised a total of US$52.7b in 286 IPOs, (compared to US$46.8b raised in 311 listings in the previous quarter), according to Ernst & Young’s Q3 2010 Global IPO update. Investors grew more cautious in Q3 amidst the economic uncertainty, however, despite some challenging high-profile debuts, 83% of global IPOs priced within their initial filing range, while 4% priced above. Global IPO activity in the first three quarters of 2010, US$152.7b raised in 888 deals, has already exceeded total yearly 2009 levels, (US$112.6b in 577 listings). Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says: “There are still numerous growth-seeking companies going public. After two years of waiting for the window of IPO opportunity to open, companies are accepting less aggressive valuations, expecting to return to the market at a later date and raise more capital through follow-on offerings.” Emerging markets in Asia, particularly China, fuel IPOs In Q3, Asian issuers accounted for 83% of dollar volume, (US$43.8b in 173 IPOs). Chinese issuers alone made up over three-quarters (76%) of global fundraising (US$40.1b in 110 deals -- a 147% increase in total proceeds from Q2). The emerging markets accounted for half of the top 20 IPOs in Q3. All of these deals were from Asia: China (8), Indonesia (1), and India (1). In Q3, out of the top 20 IPOs, ten IPOs were from developed markets: the United States (3), the United Kingdom (2), Canada (2), and the Netherlands (1) Germany (1), Australia (1). Shanghai and Shenzhen stock exchanges achieve record highs In 2010, IPO volumes on the Shanghai and Shenzhen stock exchanges reached their highest levels ever. Due primarily to the Agricultural Bank of China dual listing, in Q3, the Shanghai Stock Exchange raised the most capital (US$15.6b), followed by the Hong Kong Stock Exchange which raised US$14.0b (30% and 27% of global capital raised, respectively). The Shenzhen Stock Exchange ranked third by dollar volume (19%) with US$10.0b funds raised. Says Ericksen, “In upcoming quarters, Shanghai is expected to maintain its current status as the world’s leading exchange for capital raised, evidence of its growing liquidity and maturity.” PE and VC-backed deals make up almost four-fifth of US IPOs Under pressure to release capital to investors, exit-seeking PE and VC firms accounted for 80% of US fundraising in Q3 10 year-to-date). US exchanges raised a total of US$5.1b in 34 deals, a 12% decline in capital raised from Q2. A large backlog of 129 companies has built up in the US, with many sitting in registration much longer than normal. UK exchanges lead a sluggish European IPO market Numerous European IPOs were postponed or cancelled due to market uncertainty exacerbated by the sovereign debt crisis. In a 68% drop on Q2 proceeds, European companies raised US$3.1b in 49 IPOs in the quarter. UK exchanges led European IPO activity with US$1.9b raised in eight offerings, including the fourth largest IPO in Q3 - the US$1.0b London listing of metals and mining holding company, Vallar PLC. Financials, metals & mining, industrials and technology are the most active IPO sectors A wide variety of companies sought a public listing in the quarter. The financial sector was the most active, representing over half (51%) of all funds raised (US$26.8b in 24 IPOs), evidence of keen investor interest. The second most active sector was the materials sector (US$5.7b raised in 64 IPOs), reflecting emerging market demand for commodities. In third place was the Industrials sector (US$5.7b in 52 deals), which clearly benefited from government stimulus packages worldwide targeting infrastructural development. In fourth place was the high - performing technology sector, (US$4.5b raised in 36 IPOs), which experienced revenue growth even during the economic downturn. Future outlook Ericksen concludes: “We have seen a gradual improvement in IPO markets in the past nine months. The global IPO pipeline continues to build up with numerous businesses world-wide seeking to fund their rapid growth. Assuming the macroeconomic environment continues to stabilize, we anticipate that global IPO markets will improve.” -ends- Notes to editors About Ernst & Young’s IPO offering Ernst & Young thrives on helping companies to deliver successful initial public offerings (IPOs). Our strategic growth markets professionals, who are dedicated to serving future market leaders worldwide, help businesses like yours evaluate the pros and cons of an IPO. We demystify the process, examine the alternatives and help prepare you for life in the public spotlight. On average, we help a company go public every business day of the year. Our market-based insights and landmark IPO retreats, held in every major market worldwide, can help your business achieve its potential. It’s how Ernst & Young makes a difference. . About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topRegulatory risk back on top as key threat to business performance (14 Jul 2010)Managing talent and dealing with emerging markets fastest risers in annual risk radar London 13 July 2010: The third annual Ernst & Young Global Business Risk report highlights that despite the acute stress of the financial crisis having passed, organizations are still facing a variety of recurring and new threats and challenges across all sectors as the global economy exits recession. In a series of in-depth interviews, over 70 leading industry executives and analysts across 14 industrial sectors were asked to identify and rank the top business risks for each sector for the next 12 months as well as risks currently below the radar that could rise into the top ten in the years ahead. Regulation and compliance regained the top spot across the majority of sectors driven principally by the general uncertainty surrounding regulation which commentators believe is stalling business decision-making. However, access to credit and the threat of continuing weak economic performance in parts of the word remained high on the list of potential concerns. Risks associated with a return to normality Recruiting and managing talent was a significant climber up the risk table this year as was dealing with emerging markets; and social acceptance risk and corporate social responsibility (CSR) was new to this list this year, suggesting different strains on business as the economic recovery takes shape. Norman Lonergan, Global Head of Advisory at Ernst & Young said, “Although there is some sense of normality with firms now refocusing on how to compete with available talent and looking at the risks as well as the opportunities of investing in emerging markets, access to credit is still the second highest risk that business face and the risk of a double dip recession the third. Now is not the time for companies to take their eye off the ball.” Analysis by sector The report highlights the different ways in which key risks surface across sectors. With the most important business risks for 2010 concentrated in the areas of regulation and compliance, many of these threats are related to the aftermath of the global financial crisis. Asset management, banking, and to a lesser extent, insurance are facing a political backlash and regulatory overhaul following the global financial crisis. Oil and gas, real estate and mining and metals are contending with efforts by resource-constrained governments to gain revenues. In addition public sector organizations must cope with challenging decisions made by political leaders under pressure. Social acceptance risk and CSR are seen as a particular threat to the reputation of the asset management and banking industries, “managing planning and public acceptance risk” to power and utilities companies, “maintaining social license to operate” in mining and metals, and several below-the-radar threats in technology, telecoms and the public sector. There were considerable variations in the sector-by-sector impact of a lack of “access to credit” which was highlighted as the second most important risk. This ranges from “residual credit quality issues” in banking, to general “financial shocks” in insurance, to “access to capital” in power and utilities and mining and metals, to the broader question of “capital access and allocation” in life sciences and the growing threat of “failure to manage debt and fiscal policy” in the public sector. Lonergan concludes, “It is clear that across the sectors, organizations need to continue to scan the environment to identify emerging risk issues. The ability to anticipate threats, respond and continually adapt is as a critical a part of the management process as it ever has been.” ENDS About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topGlobal IPO activity sustains momentum in Q2 despite market volatility (7 Jul 2010) - PE backed IPOs make a comeback - European and US listings revive with several US$1b plus deals London, 7 July 2010 – Global IPO activity in the second quarter of the year showed signs of resilience despite current market conditions, both in terms of funds raised and number of deals. Listings were mainly driven by a strong Asian market and also by increased listings in the US and Europe according to Ernst & Young’s Q2 2010 Global IPO update and the Global IPO trends report 2010. In Q2 2010, 301 IPOs globally raised US$46.1b. In Q1 2010 there were 289 IPOs valued at US$52.8b. In the first six months of 2010, a total of 590 companies worth US$98.8b went public – compared to 134 deals worth US$11.8b in the first half of 2009. Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says: “The market for IPOs has been challenging mainly due to the ongoing volatility in global stock markets on the back of the sovereign debt crisis. However, we are seeing a significant increase in the interest of the number of companies proceeding with a listing. Asia, offering huge opportunities for growth, continues to be leading the world in the recovery of the capital market.” Globally, the largest IPO this quarter was Samsung Life Insurance Co Ltd, which listed on Korea Stock Exchange in April, raised US$4.4b. In Q2, Asia continued to dominate global listings, raising US$25.7b (65% of the global market) with 159 deals, compared with US$35.4b and 172 IPOs in the previous quarter. Excluding last quarter’s largest IPO, the US$11b Dai-ichi Life Insurance Co Ltd listing, Q1 to Q2 values were marginally up in Asia. The IPO market is still very much driven by China’s 9% GDP growth, robust economy, corporate earnings, and rising domestic consumption by Shenzhen’s new exchange (ChiNext) aimed at attracting small-cap listings. Private equity backed IPOs make significant contribution
Out of the top 20 IPOs this year, five of them were PE-backed companies, with transaction sizes of over US$1b. New PE-backed listings included Amadeus IT Holding SA (listing in Madrid at US$1.9b), Kabel Deutschland GmbH and Brenntag Holding GmbH (listing in Deutsche Borse at US$1.0b and US$1.0b respectively), and Chr. Hansen Holding A/S (listing in Copenhagen at US$907m), thus contributing to the overall IPO activity. “Many of the deals are coming from growth industries, including the technology, media and entertainment and healthcare sectors. Issues in these sectors are being oversubscribed between three to five times, illustrating the current market demand,” continues Ericksen. Q2 sees more European and US listings
Poland led the way in terms of IPO activity in Europe launching 20 IPOs, which raised US$4.1b – compared to US$42m in 14 deals in Q1 2010. Two of the 10 largest IPOs globally were from Poland. Powszechny Zaklad Ubezpieczen SA, which listed on Warsaw stock exchange in May raising US$2.7b, was the second largest IPO in Q2, while Tauron – Polska Energia SA, was the sixth largest at US$1.3b. With 3.5% GDP growth forecast in 2010, the Polish economy held up better than most Central and Eastern European countries through the recession, with solid private and public consumption growth forecast to grow steadily. Other major global markets which showed significant increase in activity when compared to Q1 include: the US which raised US$4.7b (33 IPOs), India raising US$2.9b (8 IPOs) and Spain raising US$1.9b (3 IPOs), compared to US$4.2b, US$1.2b, and US$22m respectively. Ericksen continued: “Europe and the US improved in Q2, and are contributing to the global IPO market recovery, both in terms of deals number and sizes of transactions. In the first half of 2010, Europe represented 18% of the global capital raised, with more European listings taking place in Poland, France, UK, Germany and Spain. North America carried about 12% of the global capital raised, with three IPOs listings in the top 20 global IPOs.” IPOs by sectors
The leading sectors by funds raised were financial, especially insurance companies, which raised US$8.2b (in 12 IPOs), the energy & power sector with US$7.9b and the industrials sector raised, US$5.8b. Materials and industrial companies were also highly active, reflecting emerging market demand for commodities (55 deals worth US$4.1b were launched by materials companies). Future outlook
Ericksen concludes “We have seen some positive signs of IPO activity in the past six months, and we remain confident that the IPO market will grow over the next two quarters. Many issuers are awaiting the window of IPO opportunity to secure more favorable pricing.” -Ends- About the report
After extensive interviews with word’s top investment bankers and stock exchange leaders, data analysis, research and Ernst & Young’s annual Global IPO Trends Report 2010 reviews the major developments in the worldwide IPO markets in 2009 and the first half of 2010. As the seventh annual global IPO report produced by Ernst & Young, this review offers an in-depth examination of the key trends for companies planning an IPO today, as well as CFO perspectives on IPO readiness. The report will be launched on 14 July and available from
www.ey.com/GL/en/Services/Strategic-Growth-Markets. About Ernst & Young’s IPO offering
Ernst & Young thrives on helping companies to deliver successful initial public offerings (IPOs). Our strategic growth markets professionals, who are dedicated to serving future market leaders worldwide, help businesses like yours evaluate the pros and cons of an IPO. We demystify the process, examine the alternatives and help prepare you for life in the public spotlight. On average, we help a company go public every business day of the year. Our market-based insights and landmark IPO retreats, held in every major market worldwide, can help your business achieve its potential. It’s how Ernst & Young makes a difference. About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topGlobal demand for electric cars could outweigh near-term supply (16 Jun 2010)Ernst & Young survey suggests 25% of drivers across markets would consider investing in new powertrain technology DETROIT June 16, 2010 - Over 25% of drivers surveyed across US, Europe, China and Japan said they would likely consider purchasing plug-in hybrid (PHEVs) or electric vehicle (EVs), as soon as they become available on the market, according to research by Ernst & Young’s Global Automotive Center. The report canvasses the views of a thousand licensed drivers in each of these regions to gauge consumer awareness and interest in alternative powertrain technologies. Nearly 7% of respondents globally indicated they would definitely consider buying a PHEV or EV. Applying each market’s percentage of those who said they would definitely buy to the number of registered drivers in each region results in a potential early adopter group of approximately 50 million drivers globally, over half of which are in China.
Commenting on the findings, Mike Hanley, Ernst & Young Global Automotive Leader, said, “As the survey suggests, PHEVs and EVs have an opportunity to make a significant entrance into the global automotive market over the next few years. Even if only a small portion of survey respondents who said they would definitely consider one of these vehicles are serious, there would still be more than enough demand to sell out the estimated 2010 and 2011 production runs of the major and new vehicle manufacturers.” Regional paradox While collectively across these geographies there is a relatively positive response to these vehicles, attitudes vary significantly between individual markets. In the US, for example, the level of awareness toward alternative powertrain technologies is higher than in any other market. However, this awareness does not translate into a higher proportion of drivers who would consider purchasing. Of those surveyed, 17% said they would never consider purchasing a PHEV or EV, and 70% would be unlikely to purchase until the vehicle is well-established in the market. On the other hand, in China, familiarity with the technologies is the lowest of all the regions, but respondents are by far the most willing to purchase a PHEV or EV when it becomes available. A striking 60% of respondents said they would most likely or definitely considering purchasing such vehicles, far more than in any other market. Only 4% of Chinese respondents would never consider purchasing a PHEV or EV. In Japan however, almost 20% of respondents claim they will never consider a PHEV or EV, and the percentage of early adopters is the lowest of all the regions (3%). Similar results are observed in Europe, with 13% and 5%, respectively. Hanley adds, “The results reveal the more mature automotive markets are more skeptical of the new vehicle technologies. China on the other hand shows more dynamic characteristics, perhaps because of its shorter exposure to internal combustion technology, with the result being Chinese consumers are less wedded to it.” Economics and environment drive decisions Across all markets, fuel savings (89%), environmental impact (67%) and government incentives (58%) were the three most cited factors that would favorably influence drivers to purchase a vehicle with new technology. By market, fuel savings saw the highest response in the US (92%), followed by Europe (89%), Japan (88%) and China (86%). China’s respondents rated environmental impact higher than in any other market (82%). “This indicates that while the environment and other factors are on consumers’ minds, new technology has to make economic sense,” said Hanley. Road blocks to technology adoption The survey also reveals that the significant factors making drivers most hesitant when choosing a PHEV or EV as their next new vehicle are access to charging stations (69%), price (67%) and battery driving range (66%). US drivers are more hesitant over access to charging stations (75%) and price (74%) than drivers in other regions. “One of the key findings in this survey is that several factors equally contribute to hesitation towards new technology. Factors holding back potential buyers vary widely across these markets, which implies that distinct marketing strategies need to be designed in each market to address the diverse concerns,” added Hanley. Jeff Henning, Ernst & Young Global Automotive Markets Leader, commented, “It is clear that to sufficiently address these factors, collaboration among automotive companies, infrastructure developers, new suppliers, governments and other entities is required to fully support the successful launch of these vehicles.” ends For the complete survey results and additional information, please visit www. ey.com/automotive or contact one of our professionals:
About the Global Automotive Center
Ernst & Young’s Global Automotive Center in Detroit, Stuttgart, Shanghai and Tokyo is focused on the mega trends in the global automotive industry. It brings together a team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference. About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients.
This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topRise in global fraud triggers serious liability concerns amongst global boards (24 May 2010)Serious fraud has doubled during the recession in some regions London, 19 May 2010 – The Ernst & Young 11th Global Fraud Survey reveals that 76% of respondents feel their boards are increasingly concerned about their personal liability from fraud, bribery and corruption. Furthermore, executives interviewed believe that their boards are not sufficiently prepared to deal with the new risks from fraud and corruption as companies return to growth. Boards are perceived as being especially worried in Latin America (95%), Middle East and Africa (87%), Central and Eastern Europe (84%) and Australia (81%). The responses of over 1,400 CFOs and heads of internal audit, legal and compliance in major companies in 36 countries across the world also show that fraud appears to be increasing significantly in some regions. For example, in Western Europe, the number of companies that had experienced a significant instance of fraud in the past two years increased from 10% to 21%. Fraud levels also remain high in Latin America (21%) and the Middle East and Africa (18%). David Stulb, Ernst & Young’s Global Fraud Investigation & Dispute Services Leader says: “Increased enforcement against fraud, bribery and corruption is a priority in many major markets. Individual executives and directors will not be immune from prosecution. Indeed, the passage of the UK’s Bribery Act is the latest example of a more robust approach to punishing the unethical conduct of individuals and corporates, and one that may have extraterritorial application.” However, despite the boards’ concern, they do not appear to be behaving in a way that would increase their own protection. Worryingly, only 4 out of 10 CFOs interviewed had been asked to perform a review of anti-fraud and corruption controls in the previous 12 months, and only 28% had been asked to produce a fraud risk assessment. Results were generally better in North America than elsewhere, but results from Central and Eastern Europe were particularly concerning, with only 18% of respondents having been asked to conduct a fraud risk assessment. David Stulb adds: “Given the pressure on corporate resources, prioritizing anti-fraud and anti-corruption efforts is essential. Regularly scheduled assessments of risks in particular businesses and markets are prudent and help those in risk management functions to triage the most pressing situations.” Having coped through the downturn, many companies are now looking for new growth opportunities, which may come through entering new markets or making acquisitions. These efforts can expose companies to numerous new risks, potentially including corruption issues. To minimize such risks, businesses have to undertake thorough, focused pre-acquisition due diligence. However, 30% of respondents stated that they rarely or never undertook such procedures, (Japan, 40%, Central and Eastern Europe, 38%). The figures for post-acquisition due diligence raise even greater concerns, with 42% of respondents admitting that they rarely or never undertook such procedures. The figure rose as high as 54% in Australia and 53% in Japan. A renewed merger and acquisition strategy also raised more specific concerns among our respondents. Forty-eight percent of chief legal officers interviewed are worried by competition risks arising from a push for growth, while 45% of chief compliance officers reported that data security will be a significant issue in the next 18 months. Responding to individual incidents or regulatory enquiries often requires extensive review of electronically stored information, including emails. Half of the legal respondents reported that the significance of emails to investigations has increased in the last two years. However, 35% say that they are planning to cut back spending on email reviews, which implies a major focus on driving efficiencies. David Stulb concludes: “When growth returns, we expect more challenges, more potential for fraud, more exposure to corruption and more interest from regulators. In the coming months, if they haven’t done so already, companies will need to review or improve their procedures to achieve long term sustainable and ethical growth.” -ends- About the survey Notes to editors
Between November 2009 and February 2010, our researchers conducted a total of 1,409 interviews in the local language with senior decision-makers from large enterprises in 36 countries. The sample was structured to hear from those who bear the responsibility for tackling fraud, and more than 85% our respondents were either CFOs or head their company’s internal audit, legal or compliance groups. About Ernst & Young’s Fraud Investigation & Dispute Services Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to achieve your company’s potential. Better management of fraud risk and compliance exposure is a critical business priority – no matter the industry sector. With our more than 1,000 fraud investigation and dispute professional around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide. It’s how Ernst & Young makes a difference.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topStrong global IPO market in Q1 sets tone for 2010 (9 Apr 2010)Asian markets still dominate listings although European IPOs return LONDON, 7 APRIL 2010 – Global IPO activity in the first quarter of 2010 showed substantial improvement over Q1 2009. Results were driven by a ongoing robust Asian market and the revival of European listings, according to Ernst & Young’s Q1 2010 Global IPO update. In Q1 2010 there were 267 deals globally worth US$53.2billion, compared to the 52 deals which raised US$1.4 billion in Q1’09 (which had the lowest IPO activity in the past decade). Asia continued to experience significant IPO activity in the quarter, with 166 IPOs raising US$35.1 billion, 66% of the quarter’s total IPO fund raising. Nine of the twenty largest IPOs were from Asia (China, Japan and South Korea). Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says: “Emerging market activity continues to be strong, but we also saw a revival of activity in Q1 in key markets such as Tokyo, London, Paris and Frankfurt. Despite concerns about volatile market conditions at the beginning of this quarter, we expect that investors will continue to return to the European and North American markets as the global economy improves.”
European IPOs pull ahead of the US
Despite the postponement of a number of high profile listings in January, European investors’ confidence returned later in the quarter with three major deals raising more than US$900 million each. These large deals contributed significantly to total funds raised of US$8 billion, up 708% on Q1 2009 and up 21% on Q4 2009. Across Europe there were 39 IPOs, the highest number since Q4 2007. Although US firms raised capital with a total value of US$4.2 billion and 25 deals, both figures represented a decline on Q4 2009.
Q1 continued appetite for IPOs in Asia
The largest IPO in Q1 and the biggest IPO in two years was Dai-ichi Life Insurance Co Ltd, which listed on Tokyo Stock Exchange in March at US$11.0 billion. This is the biggest IPO since the US$19.7 billion Visa IPO in March 2008 and the largest Japanese IPO since NTT DoCoMo’s listing in 1998. China continued to lead global activity with 109 deals (accounting for over 41% of total deals globally), and raising US$19.4 billion (37% of global fund raised). In Q1, India completed 20 IPOs listing on Bombay Stock Exchange which raised US$1.2 b and Brazil conducted 5 IPOs which raised US$3.3b locally on the Bovespa.
“Fast growth companies from emerging markets continue to list on their local stock exchanges. Exchanges in China, India and Brazil are now mature enough to source funding for the very largest companies seeking listings” says Ericksen.
IPOs by sectors
The leading sectors by funds raised were from the financials ‘Financials’ includes insurance, brokerages and banks. sector (particularly insurance companies), which raised US$16.4billion (in 16 IPOs); materials ‘Materials’ includes chemicals; construction materials; containers and packaging; metals, mining and other materials; paper and forest products. sector with US$10.2b and the industrials ‘Industrials’ includes automobiles and components; building/construction and engineering; construction materials; machinery and other industrials; transportation and infrastructure. sector with US$7.9 billion. The leading sectors by number of deals were from the materials (53 deals), industrials (51 deals) and high technology ‘High technology’ includes electronics, semiconductor, software, IT consulting and services. industries (38 deals raised US$4.8 billion).
Future outlook
Ericksen concludes “In Q2, we expect another strong quarter for the IPO market across Asia, US and Europe. There is plenty of activity planned. Issuers are currently waiting for the right window of opportunity to complete their listings to generate better IPO pricing. With the global capital markets becoming more stable, coupled with a strong IPO pipeline and market liquidity, we forecast 2010 global IPO activities will continue to be strong.”
- ends - About Ernst & Young’s Global Real Estate Center
Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks – while meeting the challenges of expanding globally and achieving sustainable growth. The Ernst & Young Global Real Estate Center brings together a worldwide team of professionals to help you achieve your potential – a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference. About Ernst & Young
About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
This document is made only for media release. All rights are reserved by Ernst & Young Han Young. Please note that you are not allowed to use this for commercial purposes and make sure that you acknowledge the source if you cite or display any part of this document in a publication.Back to topREITs leading real estate out of global financial downturn (8 Apr 2010)Asian REITs significantly outperformed other regions London & Sydney, 9 March 2010: Real estate investment trusts (REIT) are leading other property investments out of the global economic downturn largely thanks to the resiliency of the REIT model, according to a report released today by Ernst & Young. The report, Against all odds: Ernst & Young’s Global REIT Report 2010 covers 16 of the world’s largest REIT markets and includes analysis of total rates of return, market capitalization and debt loads as well as an outlook for the global REIT sector. “The nature of real estate has typically been that it takes time for investors to identify and select investments but REITs were created chiefly to provide a market for investors to be able to buy and sell real estate – through securities rather than bricks and mortar – more efficiently,” said Howard Roth, Global Leader of the Real Estate sector for Ernst & Young. “Our analysis shows that during the recent global downturn, REITs did what they were intended to do: give investors – albeit at a price – an opportunity to quickly adjust their exposure to real estate by selling REIT stocks. Now, REITs are providing investors with a way to capture the market rebound by adding real estate stocks back into their portfolios,” added Roth.
Double digit positive returns for REITs
Since March 2009, many REIT markets around the world have seen significant increases in share prices and REITs have raised billions of dollars by going back to the stock market for secondary (or follow-on) equity offerings to reduce debt, recapitalize their balance sheets and prepare their businesses for the next wave of growth. “The turnaround in the global REIT market in 2009 is best shown by the fact that all REIT markets – except Japan -- saw double digit positive returns for the year,” said Robert Lehman, Global Leader of Ernst & Young’s Real Estate Investment Trust practice. Returns for Japan’s REITs grew just 6.68%, with Australia’s REITs performing slightly better at 10.4% growth in returns in the same full year period. The largest single REIT market in the world, the United States, witnessed almost 28% returns. Ernst & Young’s report reveals a compelling story for Asia where REITs as a group have outperformed other regions of the world in terms of total returns. Singapore and Hong Kong REITs posted 85.6% and 64.5% returns respectively in 2009 with Malaysia (38.6%) and South Korea (28.4%) also showing strongly. South Korea, Malaysia and Hong Kong all recorded positive rates of return in their REIT markets over the last three years, despite the global downturn. Dae Seop Roh, Real Estate Industry Leader of Ernst & Young Han Young, said “Korea’s REITs market volume is relatively small compared with overseas markets, but the outlook is bullish. Korea is currently managing 36 REITs funds including non-listed REITs, among which 19 were newly established last year.” Roh added “With the recent trend of converting real estate into securities, REITs has the advantage of reducing the variability of investment returns and obtaining tax benefits.” -ends-
About Ernst & Young’s Global Real Estate Center
Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks – while meeting the challenges of expanding globally and achieving sustainable growth. The Ernst & Young Global Real Estate Center brings together a worldwide team of professionals to help you achieve your potential – a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference.
About Ernst & Young
About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
This document is made only for media release. All rights are reserved by Ernst & Young Han Young. Please note that you are not allowed to use this for commercial purposes and make sure that you acknowledge the source if you cite or display any part of this document in a publication.Back to topPositive outlook as global technology M&A shows growth for third consecutive quarter (23 Feb 2010)- Full year deal value down a fraction, as Q409 values quadruple over Q408
- Growing role for technology-enabled innovation as industries transform
15 FEBRUARY 2010 — Mergers and acquisitions (M&A) activity in the global technology sector grew for the third consecutive quarter in Q4 2009, bringing optimism for continued growth in 2010, according to a new report by Ernst & Young. Global technology M&A update found that deals done in the technology sector rose by 13% to 553 in the quarter, compared with 488 in Q309. This followed consecutive rises in Q309 and Q209, after bottoming out in Q109 (at 405). The final quarter of 2009 was also the first quarter for deal volume to top its year-earlier counterpart, increasing by 32% compared with 418 deals in Q408. However, full-year activity was down 29%, dropping to 1,886 deals in 2009 from 2,665 in 2008. Joe Steger, Global Technology Transaction Advisory Services Leader at Ernst & Young, says: “Technology sector M&A has emerged steady and positive in 2010. Companies faced a variety of pressures in 2009 — from managing excess capacity and expenses to drops in sales to tightened credit markets — and they faced them with renewed emphasis on financial and operational flexibility. “The question remains whether the slow, steady climb in transaction activity that occurred in 2009 represents the development of a new growth curve, or if the technology market is establishing a relatively lower ‘new normal’ level of transaction activity.” Deal values up Total deal value quadrupled in Q409 (US$35.4 billion) compared with Q408 (US$9.2 billion), though full-year 2009 total M&A disclosed value (US$94.8 billion) is 2% lower than full-year 2008 (US$96.3 billion). However, quarterly value totals gained momentum throughout the year with 7 of the top 10 largest deals by dollar value breaking US$1 billion both in Q309 and Q409, boding well for continued growth in 2010. Average value of deals rose 51% to US$145 million in 2009 from US$96 million in 2008. Steger continues: “Technology corporate deal values have surged in comparison to PE values — as leading corporate companies have used their strong cash positions to do deals at reasonable valuations. PE firms had less flexibility in 2009 due in part to the difficulty in arranging debt financing.” Technological innovation Deal announcements in the fourth quarter included dozens of deals for mobile content, games, social networking, payments and other narrower mobile applications. Additionally, about two dozen solar or energy-related technology deals and nearly three dozen healthcare-related technology deals were announced. “This reflects the strong demand for mobile infrastructure upgrades and underscores the rapid development of a mobile infrastructure ‘ecosystem’ as smartphones and other mobile devices proliferate. It is also indicative of the growing role for technology-enabled innovation in transforming other industries,” says Steger. Cross-border activity Cross-border deals fell to 31% of corporate deals in 2009 from 35% in 2008. While the total value of cross-border deals (corporate plus PE) fell 20% in 2009 to US$24 billion. However, the average value for cross-border deals climbed 42% in 2009 from 2008. Of corporate deals done, the US completed the most deals in Q409 (222), 81% of which were domestic deals. China completed 31 corporate deals and had the largest percentage of domestic deals (84%). Of Q409’s corporate deals, India completed the highest proportion of cross-border deals at 50%. Corporate deals done overall by China and India in 2009, however, dropped significantly compared with 2008, from 139 to 86 in China and 80 to 39 in India. 2010 outlook “It looks like 2010 could be a good year for technology M&A, given the continuing stabilization of the global economy, technology innovations, increasing company valuations and the improved operating performance of technology companies through 2009. But companies should be prepared for continued market volatility and stay focused — each company’s strategy is different and every deal is unique. Successful companies will conduct detailed upfront analysis, comprehensive due diligence and robust integration planning before entering into any deal,” Steger concluded. Sung Ho Shin, Transactions Leader at Ernst & Young Han Young added: “The Korean economy has been showing a fast recovery pace compared with advanced countries. Leading companies are performing strongly due to various efforts such as restructuring, and global M&A is emerging as a strategic measure to secure a prominent position in the international market. Korean technology companies are also expected to increase outbound M&A deals in the future based on business recovery.” - Ends - About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients.
This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Ernst & Young’s Global Technology Center Driven by relentless innovation, compressed market timing and dynamic consumer demand, the technology industry is constantly changing. Ernst & Young’s Global Technology Center brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference. About the report Global technology M&A update: October-December 2009 and year in review is based on Ernst & Young’s analysis of FactSet Mergerstat data for 2008 and 2009. Deal activity and valuations may fluctuate slightly based on the date that the FactSet Mergerstat database is accessed. Only disclosed value deals are used in all value analysis.
This document is made only for media release. All rights are reserved by Ernst & Young Han Young. Please note that you are not allowed to use this for commercial purposes and make sure that you acknowledge the source if you cite or display any part of this document in a publication. Back to topErnst & Young Han Young holds 2010 Amended Tax Law Seminar (8 Feb 2010)Experts from the Ministry of Strategy and Finance present major amendments to tax laws February 8, 2010 (Seoul) – Ernst & Young Han Young (www.ey.com/kr, Country Managing Partner SeungWha Gweon) will host a seminar on the 2010 amended tax laws for tax accounting and finance managers at the International Conference Hall on the first floor of the Korea Exchange in Yeouido on February 9th. Ernst & Young Han Young annually holds a seminar on tax law amendments to help clients’ personnel enhance their knowledge of the latest tax changes. At this year’s session, the Tax and Customs Office of Ministry of Strategy and Finance (MOSF) will present on the Corporate Tax Act, Income Tax Act, Value Added Tax Act, and Restrictions of Special Taxation Act. Ernst & Young Han Young had held its first 2010 Amended Tax Law Seminar on January 21st for some 300 finance and tax managers. Many clients have shown keen interest, which led to the second session. John Lee, Tax Leader, Ernst & Young Han Young explained, “We decided to hold two seminars on the amended tax law in order to further our clients’ understanding of tax adjustments and reconciliation for FY2009.” The session will be held from 1:00–5:30 p.m. on February 9th and is offered free of charge. For further information, refer to the website at www.ey.com/kr/taxlaws. # # # About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
This document is made only for media release. All rights are reserved by Ernst & Young Han Young. Please note that you are not allowed to use this for commercial purposes and make sure that you acknowledge the source if you cite or display any part of this document in a publication. Back to topGlobalization to resume in 2010 after temporary blip (8 Feb 2010)Ernst & Young and EIU report on implications for business of a changing economic landscape DAVOS, SWITZERLAND, 29 January 2010 - A report released today by Ernst & Young in cooperation with the Economist Intelligence Unit (EIU) highlights how globalization slowed during the financial crisis and the subsequent downturn. But as the economy recovers in 2010 the growth of globalization will once again resume, although at a slower pace than in the past decade, the report predicts. Redrawing the map: globalization and the changing world of business draws on three sources of original research: a Globalization Index, created by the EIU, that measures 60 countries according to their degree of globalization relative to their GDP; an online survey of 520 senior business executives worldwide, conducted in late 2009; and a program of in-depth interviews with 30 senior executives and high-level experts. The Globalization Index, which runs from 1995 to 2013, gives an overview of how the drivers of globalization have evolved and will continue to develop. The index has five criteria: openness to trade, capital movements, exchange of technology and ideas, labor movements and cultural integration. Each of the criteria’s weighting was validated by the business leaders surveyed. Globalization and economic growth
James S. Turley, Chairman and CEO of Ernst & Young, comments, “The long-term trend toward increased globalization has, unsurprisingly, paused in the last couple of years. Countries and corporates have been retrenching while the recessionary storm blows over.”
The index measures the relative level of global engagement of a country. It does not measure the absolute or relative impact a country has on global commerce or the global economy. This means that countries that have large domestic markets – such as China, India and the United States – appear towards the middle of the table. Small countries that rely heavily on exports and world trade – such as Singapore and Ireland – appear at the top. More closed countries – such as Iran and Venezuela – are at the bottom.
Many of the same countries that sat at the top of the index in the 1990s continue to do so. Where there has been significant change is with the emerging economies in the bottom half of the index.
John Ferraro, Chief Operating Officer of Ernst & Young, explains, “Although the index questions whether the degree to which a country is globalized correlates with its subsequent economic growth, it clearly shows all the major emerging economies becoming more globalized. Also, the contrast between 2010 and 1995 is even more significant for certain smaller countries like South Korea and those from Eastern Europe like Romania. Both have seen major advances in the past 15 years.” What does it mean for business?
The temporary halt to the trend in the last two years does not alter how significant the longer-term implications of globalization will be for business. Companies based in emerging markets are looking to compete more and more with established corporates from developed markets. This competition is playing out not only in the emerging markets themselves but also increasingly in Western markets.
Turley explains that to be a long-term winner in this new globalized world, “Companies must rethink many aspects of their overall strategy ranging from capital raising to how they source their products. And as companies deepen and broaden their presence in international markets, the need for culturally diverse management teams becomes all the more pressing.”
To fully maximize the benefits of more open global markets, business will also have to make a more concerted effort to engage with governments and other policy makers on global issues such as protectionism, regulation and trade.
As Turley concludes, “Whether you like it or not, globalization is here to stay and will deepen further over the longer term. It can be painful – but the exchange of ideas, culture, people and capital is a force for good from which the majority of the world’s population will see an economic upside.” Ends About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
This document is made only for media release. All rights are reserved by Ernst & Young Han Young. Please note that you are not allowed to use this for commercial purposes and make sure that you acknowledge the source if you cite or display any part of this document in a publication. Back to topErnst & Young recognized as a global knowledge leading business (12 Dec 2009)London, 8 December 2009 – For the twelfth consecutive year, Ernst & Young has been recognized as a Most Admired Knowledge Enterprise (MAKE). A panel of Global Fortune 500 senior executives and internationally-recognized knowledge management and intellectual capital professionals selected the 2009 Global MAKE Winners. Mala Garg, Ernst & Young’s Global Knowledge Leader, comments: “Creating, leveraging and providing easy and contextual access of all our experiential knowledge to our practitioners and clients helps differentiate us in the marketplace. We are continuously evaluating and investing in the right people, systems and processes to allow for knowledge-sharing across geographies, business units and industry sectors. This is particularly crucial in the current economic climate as we work with our clients to help them focus on effective growth strategies. To be effective with our clients, our people need consistent access to leading practices, business intelligence, market trends and more.”
“The MAKE award recognizes our efforts to make this a reality, enabling our people to provide key insights and points of view on the matters of importance to our clients at just the right time. The award validates our ongoing focus on evolving our knowledge culture and content creation, collection and distribution processes and systems so we can make a difference to our clients and in our communities,” she adds. Launched in 1998, the annual MAKE survey is now the leading benchmark for the world’s best knowledge-based organizations. Each year, the survey identifies organizations that stand out from the crowd in the knowledge economy. Ernst & Young is one of the few organizations to have been awarded every year since 1998, and in 2000 Ernst & Young was inducted into the MAKE Hall of Fame. About the MAKE Research Program
Teleos, an independent knowledge management and intellectual capital research firm, administers the Most Admired Knowledge Enterprises (MAKE) program. The KNOW Network is a web-based global community of organizations dedicated to achieving superior performance through benchmarking, networking and best practice knowledge sharing. The MAKE research program consists of the annual Global MAKE study – the international benchmark for best practice knowledge organizations – and regional/national studies, including Asia, Europe, India, Indonesia, Japan and North America. - ends -
About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients. This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients. Back to topOne third of global businesses actively seeking M&A targets in next 12 months (23 Nov 2009)Majority believe tough financing challenges will remain for at least three years 16 NOVEMBER 2009 – There is a growing sense of anticipation about the global M&A environment with 33% of businesses likely or highly likely to acquire other companies in the next 12 months, according to a new study of almost 500 senior executives around the world by Ernst & Young’s Transaction Advisory Services. In fact, 25% expect to do so in the next six months. The study, entitled Why capital matters – building competitive advantage in uncertain times, is underpinned by the first in a regular series of surveys called the Capital confidence barometer, which was conducted in October. The survey finds that despite recognizing the opportunity for transactions, 62% of businesses feel their ability to act is restricted by various factors, including the lack of available financing. Pip McCrostie, Global Vice-Chair, Transaction Advisory Services, at Ernst & Young, says: “In the coming months, there is likely to be an increase in M&A activity as companies dispose non-core, underperforming or distressed assets. Those in a position to buy will have the opportunity to capture market share and grow revenues in ways that were impossible two years ago. “Buying will not be an option for all. Capital is no longer cheap nor is it readily available. The tough new realities will force some executives to seriously consider a strategic review. Many companies have responded to the recession with short-term measures around cash and costs. Sensible though these were, they are largely temporary, buying breathing space. To thrive, companies need to be resilient and they also need to adapt quickly. That means being able to compete strongly for new funding options in a time of scarce capital, strengthening their core operations and having the ability to make opportunistic decisions.” The survey found strengthening core operations is the primary transaction driver, with 64% considering acquisitions for this reason and 50% of executives are looking to acquire to enter new geographic markets — nearly half list the US as the most attractive developed market destination, while emerging markets were dominated by India (30%) and China (27%). Driving the capital agenda
While valuation uncertainty, insufficient financing, investor caution and board scrutiny are cited as current obstacles to doing deals, raising capital is recognized as a critical factor, with 46% prepared to consider alternative deal structures that depend less on debt. McCrostie adds: “We are already seeing leading boards drive a more focused, disciplined and rigorous management of their capital. Different options will suit different needs — whether it’s operational restructuring, divesting or acquiring opportunistically, but doing nothing and trying to ride out the storm is not a strategy for success.” Survival of the quickest
In an environment where further distress will drive short notice accelerated timetables – readiness to act is critical for success. Forty-five per cent of executives expect an increase in distressed assets coming to market yet two thirds are not confident in their ability to act quickly. Only 36% say they are ready to act quickly should the right opportunity present itself. “Boards will now need to juggle new demands in this environment. They will have to maintain investor confidence, win the competition for scarce capital, adapt to changing market conditions and exploit opportunities for growth. The winners will avoid the temptation of inertia and have the confidence to use their capital at a time when rapid decision-making could make the crucial difference between success and failure elsewhere,” says Ernst & Young Korea TAS Leader Sung Ho Shin. He adds, “The market will divide into those who quickly adapt and thrive and those who play by the old rules for these very new market conditions. A nimble response is needed, no matter the size of the organization – much like time and tide, market share waits for no man.” - Ends -
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