<article>The global financial assets are expected to grow by about $300 trillion between 2010 and 2020; this growing capital will spur more mergers and acquisitions (M&amp;A) around the world.</article>

The global financial assets are expected to grow by about $300 trillion between 2010 and 2020; this growing capital will spur more mergers and acquisitions (M&amp;A) around the world.
The trend is already visible in South-East Asia (SEA), with the M&amp;A activity picking pace. The appetite to acquire is at a two-year high in the region, reports a October 2014  <a style="text-decoration: underline; color: #0000ff;" href="http://www.ey.com/SG/en/Newsroom/News-releases/PR-EY-m-a-rebounds-strongly-to-drive-corporate-growth-in-southeast-asia" target="_blank">EY Capital Confidence Barometer</a> research, adding that one in two (surveyed) corporates said that they were pursuing an  acquisition over the next 12 months while 72% have two or more deals in their pipeline.
In this situation, an investor should not stay on the sidelines, opined Francesco Cigala, partner, Bain &amp; Company, adding that currently, the world has a lot of capital but not as many assets; making the situation ripe for mergers and acquisitions (M&amp;A).
According to him, in this decade (2010-2020) the world will be awash with 10 times more capital, than its collective GDP. “There is a lot of capital looking for opportunities, to be used or to be deployed; and M&amp;As will be one of the possibilities (for capital deployment),” he said, while addressing an International M&amp;A Conference, last week.
“Investors and companies cannot be inactive, they will need to build or buy. Those involved in M&amp;A activities will be better off than those who are not,” he said.
With the world&#8217;s total financial assets, estimated to touch $900 trillion mark, the collective financial holdings (which is the sum of stocks, bonds and other financial instruments) will hit $500 trillion mark in 2020, overshadowing the original estimate of $300 trillion asset base and $90 trillion for world GDP.
Under this environment, asset prices will be pushed up and investors will continue to look for growth areas, said Cigala. “25% of growth in capital will come from the increase in both the population and the per capita GDP. The next billion people will wear more, use more technology. There will be a lot of opportunities for the world to change,” he said while describing newer growth avenues, which investors can tap.
According to the research done by Bain &amp; Co, the firms or businesses, which did larger deals, had better shareholder return than the ones with smaller deals. The research used shareholder return as a measure for the success of a M&amp;A deal.
That said, the companies or investors that cut large deals with lesser frequency, have not done better than those with consistent smaller deals, Cigala informed,quoting the company research. &#8220;Strangely enough, scope deals, which add to the value chain, did better than scale deals, which we originally assumed, would do better,” he noted.
According to him, In M&amp;A deals, the focus on the core business was key to a successful deal. “We found that if companies do acquisitions that are one- or two-step away from their core business, the chances of being successful was drastically reduced,&#8221; he said.
In another session, Institute of Mergers, Acquisitions and Alliances president, Prof Dr Christopher Kummer said a thorough due diligence exercise was one of the main factor for a successful M&amp;A deal. “The popular saying is that 50% to 75% of all M&amp;As fail. The failure is mainly due to a less-than-thorough due diligence process,” he said, advising companies to be prepared for higher investments in the due diligence exercise.
Cigala added that it was also important for companies to have a ‘plan B’ and a walk-away clause from a deal while doing the due diligence.
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Riding the global M&A wave: right way forward

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