Alliances and Partnerships Emerge as Preferred Business Expansion Strategies Amid Economic Challenges

As businesses navigate a complex economic landscape characterized by rising trade barriers, high interest rates, and increased regulatory scrutiny of acquisitions, alliances and partnerships are emerging as the preferred strategies for expansion. Companies are seeking alternative growth opportunities to adapt to the challenging environment.

According to KPMG, their industry-driven structure and market-leading technology alliances are helping clients meet their business challenges. In the private equity sector, a strategic shift is underway, with firms focusing on performance improvement initiatives rather than cost-cutting to unlock value. This approach emphasizes pre-deal diligence and the role of operating partners in identifying value drivers early and crafting roadmaps with specific initiatives and timelines.

Why this matters: The shift towards alliances and partnerships as preferred business expansion strategies reflects the need for companies to adapt to the changing economic landscape. These collaborative approaches enable businesses to leverage shared resources, expertise, and market access, while mitigating the risks associated with traditional mergers and acquisitions in the current environment.

Despite the economic challenges, private equity dealmaking is expected to pick up during 2024, driven by renewed confidence and increased access to capital. Firms that embed continuous performance improvement (CPI) into their strategies can gain a competitive advantage in this market.

In Singapore, M&A activity remained slow in 2023, with deal values plummeting 59% to approximately USD16.9 billion, in line with global trends. However, deal volume experienced a 31% increase, driven by robust Japanese involvement, with Japanese M&A investments in Singapore quadrupling to approximately USD3 billion. The industrials and chemicals sector dominated deal value, while the technology, media, and telecoms sector led in terms of deal volume.

The evolving M&A landscape is not limited to Asia. In the European Union, particularly in Luxembourg, companies are adapting their strategies to focus on emerging trends like climate, ESG, and technological disruption. The due diligence process has become increasingly crucial, with heightened importance given to discussions on material adverse change clauses, compliance risks, and governance risks.

In a notable partnership, Thai brokerage firm Pi Securities has joined forces with WealthTech firm Velexa to transform the global equities trading market. The alliance aims to leverage Pi Securities' market expertise and Velexa's state-of-the-art trading technology to enhance the investment experience for customers worldwide, focusing primarily on the US and Hong Kong markets.

"The strategic alliance between Pi Securities and Velexa is expected to provide investors with enhanced access to a broader range of investment opportunities, boosting confidence and participation in international equities trading," stated a spokesperson for the companies.

Key Takeaways

• Alliances and partnerships emerge as preferred business expansion strategies.
• Private equity firms focus on performance improvement over cost-cutting.
• M&A activity in Singapore sees 31% increase in deal volume, driven by Japanese investments.
• EU companies adapt strategies to address climate, ESG, and technological disruption.
• Pi Securities and Velexa form alliance to enhance global equities trading experience.