The APAC M&A landscape is undergoing a significant transformation. China, formerly the dominant force in dealmaking, is encountering a deceleration due to economic challenges and stringent regulatory measures.

This transition is paving the way for India and Japan to emerge as the new focal points of M&A activity in the region. India's tech-driven economy, with its innovative startups and expanding consumer market, is attracting substantial investor capital. Simultaneously, Japan's strategic focus on outbound deals, especially in the technology and healthcare sectors, is driving a surge in cross-border transactions.

The Financial Times, in partnership with Datasite, hosted a panel discussion on the current state and future outlook of M&A activity in the APAC region. The panel, moderated by Kaye Wiggins, Financial Times’ Asia Financial Correspondent, included experts Jacqueline Chan (Partner, Milbank LLP), Barry Chen (Managing Director and Partner in Charge, InterChina Partners), Amit Thawani (Managing Director, and Head of IB, Nomura India), and Desmond Chua (Head of APAC, Datasite).

Ongoing disparity between M&A activity in APAC and rest of the world

According to PwC and LSEG, M&A activity in the APAC region has seen a significant decline, with a 32% drop in the first half of 2024, contrasting sharply with a global increase of 5%. This downturn is primarily driven by reduced investor interest in Chinese deals, influenced by economic slowdown, new listing controls, and geopolitical tensions. The global growth in deal value, particularly in the Americas, has been propelled by mega deals in the technology and energy sectors. The total deal value in the Americas rose by 22% in the first half of the year, despite a decrease in deal volume.

According to more than 30% of dealmakers, most of the M&A opportunities for APAC in 2025 lie in divestitures, liquidations, carve-outs, exits, or bolt-on acquisitions.

Emerging markets benefitting from China+1

India and Japan are emerging as key markets for M&A activity, attracting increased investor interest due to their strong economic performance. In addition, Southeast Asia is gaining attention, especially in sectors like data centers and renewable energy. These regions are seen as attractive alternatives to China, offering new opportunities for dealmaking. Japan has been a significant beneficiary of inbound capital, while India continues to see a high volume of deals. Deal counts in the wider APAC region have increased year-on-year, with Japan and India contributing significantly to this uptick.

AI boom drives dealmaking in tech, energy, infrastructure

The consumer sector has been particularly active in Japan, with significant deals in the consumer and TMT sectors, particularly the technology segment. With the ongoing geopolitical tensions, China is striving for technology self-sufficiency. Meanwhile, the demand for data centers is rising, driven by the AI boom, while investments in related sectors such as renewable energy and infrastructure are also increasing.

Dealmakers at the webinar agree that APAC’s TMT sector will see the most deals in 2025.

Private equity dynamics

Private equity firms are focusing on exits, often considering dual-track processes (IPO vs. sale) to maximize returns. India’s capital markets are prolific, providing opportunities for dual-track processes. There is a noticeable trend of down rounds in new funding, especially in the tech sector. This adjustment in valuations is helping to align buyer and seller expectations, which is crucial to facilitating successful deals.

Future outlook

The result of the US election is a significant factor influencing M&A strategies, particularly with regard to US-China relations. Potential changes in trade policies and investment flows are causing uncertainty, given the high exposure of the export sector.

Additionally, there is increased interest from Gulf institutions in APAC markets, particularly in co-investments with private equity firms, highlighting the region’s growing attractiveness to the Middle East. The panel agreed that Southeast Asia could benefit from a broader scope of investments, regardless of the election outcome.

Ongoing shifts in M&A activity into 2025 are anticipated, with a focus on strategic realignments and sector-specific opportunities. The realignment of valuations and the emergence of new markets and sectors are expected to drive future dealmaking in the APAC region.

To get deals over the finish line in the next 12 months, dealmakers say valuation analysis and negotiation; local market knowledge and connections; and creative deal structuring will be crucial.

As we head into 2025, dealmakers should learn how to adapt so they can navigate dynamic market conditions successfully. Whatever the type of transaction, dealmakers need to complement their strategy with tools that streamline their workload and improve process efficiency.

Get a deeper understanding of the dealmaking strategies shared by the panelists during the webinar, watch the recording on demand by clicking on the link below.