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Mergers and Acquisitions in Nontraditional Markets on the Rise

Mergers and acquisitions in developing economies has been on the rise

When it comes to mergers and acquisitions, the United States tops the list - literally. A recent report from London's Cass Business School ranked 148 countries on their attractiveness for M&A deals. But according to CFO.com, the top markets may not be the most interesting part of the report.

M&A transactions in "nontraditional" markets have increased significantly since 2005, the report indicated. M&A activity in areas like South America, Africa, the Middle East and Eastern Europe, has climbed from 25 percent of the market in 2005 to 39 percent in 2011. The researchers evaluated the attractiveness of markets based on five factors: regulatory and political; economic and financial; technological; socioeconomic; and infrastructure and assets. Notably, as Western European markets like Ireland and Greece that have been heavily affected by the economic crisis moved down the list, emerging markets like Bangladesh and Colombia have moved up.

"The trick for acquisition-hungry companies is probably to look for those countries primed to move up the scale the most," according to the CFO analysis of the report. "[Businesses] need to be careful, though, because additional research by the study team looked at how well each of the five key factors explained M&A deal volume. Technological and socioeconomic factors were found to be most important, with regulatory and political factors being by far the least important."

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