Hong Kong could become a hotspot for mergers and acquisitions activity as many small- and medium-sized enterprise (SME) owners in the city approach retirement age, throwing up opportunities for change of ownership of their firms, a business advisory firm said.
Last year, six out of every 10 deals in the city that involved transfer of control of an SME saw the participation of overseas investors, according to BCMS, a UK-based firm that has specialized in sell-side advisory services for privately-owned businesses.
It is expected that more buyers will come to Hong Kong, said Mike Sweeting, international business development director at BCMS.
Buyers from countries such as South Korea and Australia will follow in the footsteps of counterparts from the United States, the United Kingdom, Singapore, Japan and Taiwan in acquiring businesses in Hong Kong, the Hong Kong Economic Journal quoted Sweeting as saying.
Hong Kong serves as a foothold for foreign enterprises seeking to enter the China market, with the city having many attractions including low tax rates and highly transparent accounting standards, he said.
According to BCMS, transactions involving SME sales tripled in terms of deal value last year, although in terms of numbers the deals remained at same level as in 2014.
In 2016, it is possible that both the transaction value and volume will rise 10 percent, said Sweeting.
Barkis Ip, an executive director at BCMS, about 480 Hong Kong firms sold controlling stakes last year. The transactions, including large corporates as well as small businesses, were worth a combined US$160 billion, he said.
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