Prakruthi N
Dentons Link Legal, New Delhi
prakruthi.n@dentonslinklegal.com

The year 2025 appeared to witness a major surge in dealmaking as the global volume of mergers and acquisitions (M&A) reached a whooping US$3tn, which is a 33 per cent increase year on year, comprising 45 mega deals valued over US$10bn. However, this development can mostly be attributed to high average deal values as there was barely an increase in the number of M&As that year.^[1] Moreover, if one peeks into the corporate strategies of these companies, capital expenditure on mergers and acquisitions hit a ten-year low this year. The top 700 S&P World Index companies spent a total of seven per cent of their cash expenditure on M&A in 2025 while such expenditure accounted for nine per cent to 17 per cent of their total cash expenditure over the last year.^[2]

In today’s complex global economy, where mature markets grapple with stagnation and uncertainty, Asia may be the key to reviving global M&A activity. In 2025, China boasted the highest deal count globally while Japan’s M&A market doubled in size from the previous year, becoming the third-largest M&A market for the year, signalling that, despite being a more mature market, the M&A environment in Japan is still growing every year.^[3] This positions Asia as an essential arena for strategic mergers and acquisitions, paving the way for companies to capture emerging value pools amid shifting trade dynamics.

Asia remains the world’s fastest-growing economic region, with emerging and developing economies continuing to grow faster than their European and North American counterparts. Markets such as China, India, Vietnam, Indonesia and the Philippines are supported by large populations with an expanding middle class, undergoing rapid urbanisation culminating into rising consumer demand. Cross-border M&A provides a faster and more efficient route for global companies to establish or expand operations in these regions and tap into their markets.

For cross-border acquirers, Asia presents an opportunity to access new customers, expanding domestic demand and long-term value creation. Even mature markets such as Japan, South Korea, Singapore and Hong Kong offer stable platforms for regional expansion and outbound investment.

Strategic position in global supply chains

Asia’s position as the world’s manufacturing powerhouse continues to be a key driver of cross-border M&A in the region. Asia remains the backbone of global manufacturing, offering scale, cost and time efficiency and innovation. China plays a critical role in global manufacturing whose deeply integrated supply chains and advanced infrastructure remain unmatched. China has moved steadily up the value chain, with strength in advanced manufacturing, electric vehicles, renewable energy equipment, robotics and semiconductors. However, in China, regulatory and geopolitical considerations require careful navigation.

Japan and South Korea are global leaders in high-value manufacturing, particularly in automotive, electronics, semiconductors and precision engineering. These markets offer technological sophistication, strong intellectual property protection and highly skilled workforces. Cross-border M&A in northeast Asia often involves strategic acquisitions, minority investments or joint ventures aimed at accessing proprietary technology, research capabilities and advanced manufacturing processes. These jurisdictions also serve as regional headquarters and innovation hubs for broader Asian operations.

Asia offers a network of complementary manufacturing centres, each with distinct advantages. In recent years, countries such as Vietnam, Indonesia, India, Thailand and Malaysia have emerged as increasingly attractive alternatives and complements to traditional manufacturing centres like China and Bangladesh, reshaping regional supply chains and M&A strategies. As global companies reassess supply chains in response to geopolitical shifts, trade policy changes and operational risk, Asia’s diverse manufacturing hubs have become central to cross-border M&A.

As multinational companies pursue strategies like ‘China plus one’ to diversify supply chains, countries like India and Vietnam have benefited from increased inbound investment across electronics, textiles, consumer goods, automotive components and semiconductors. Cross-border M&A has played a critical role in this process, enabling foreign investors to acquire existing manufacturing platforms, local expertise and established supplier networks rather than building operations from scratch. Projects such as the Belt and Road Initiative and increasing collaboration among ASEAN countries^[4] have strengthened Asia’s position as a reliable supply chain, that is efficient and cost effective.

Indonesia possesses a strong geographical advantage owing to its abundant natural resources, particularly metals, hosting the world’s largest nickel reserves, which is a major component necessary for the production of electric batteries.^[5] Thailand remains a regional hub for automotive and advanced manufacturing,^[6] while Malaysia is well-positioned in electronics, medical devices and precision manufacturing. India is also strengthening its role as a global manufacturing hub, supported by government initiatives such as ‘Make in India’ and production-linked incentive schemes. With its large domestic market, engineering capabilities and improving infrastructure, India is attracting cross-border M&A in pharmaceuticals, electronics, automotive components and industrial manufacturing.^[7]

Cross-border M&A activity in these jurisdictions is often driven by strategic objectives, including supply chain resilience, cost optimisation and proximity to end markets. Acquisitions and joint ventures allow investors to respond quickly to shifting trade dynamics, tariff considerations and geopolitical risks.

Sectoral diversity and innovation

Although Asia is widely known for being a manufacturing hub, it is also increasingly a centre for innovation, digitalisation, research and development. Technology, fintech, e-commerce, renewable energy, healthcare and infrastructure continue to attract cross-border interest.

Asia’s rapid adoption of digital technologies, and government support for innovation ecosystems in Asian countries, especially China, Singapore, South Korea, Japan and India, has made Asian targets attractive for strategic acquisitions and joint ventures. Investors are able to acquire not just assets, but also talent, intellectual property and regional know-how.^[8]

In an extremely competitive and fast-paced sector, Asia is emerging as a leader in technologies such as AI, cloud and data analytics. Asian countries are participating in both inbound and outbound deals in these sectors. In India, 2025 saw a series of outbound mergers by technology firms, including Coforge’s acquisition of Encora, a US-based firm providing AI engineering services, in a deal valued at US$2.35bn, to gain access to cutting-edge AI technology.^[9]

IPO opportunities

In 2024, India accounted for 30 per cent of global Initial Public Offering (IPO) listings, witnessing 327 IPOs which collectively raised US$19.9bn.^[10] An expanding public securities market in India, supported by a rapidly growing retail investor base, as well as increasing access to venture capital funds and institutional investors, makes India a desirable destination for public listing. The Government of India has introduced a number of reforms to facilitate ease of business, and India offers a massive pool of highly skilled employees. Merging into Indian entities opens up opportunities for global corporations to take advantage of India’s capital markets and investor base.

In 2025, Southeast Asia saw an increase in high-value IPOs across technology, financial services, real estate and consumer sectors, particularly in Vietnam, Indonesia, Malaysia and Singapore. Listings in Singapore and Hong Kong have increasingly emerged as strategic gateways for companies seeking to expand their presence in Asia. Hong Kong remains one of the world’s leading IPO markets, offering deep liquidity and direct access to mainland Chinese capital. Singapore is recognised for its predictable and transparent regulatory framework grounded in common law principles, providing a familiar environment for international investors.^[11]

Conclusion

Asia is home to a growing pool of capital, including sovereign wealth funds, private equity firms, family offices and institutional investors. Domestic Asian investors are increasingly active in outbound M&A, while international investors continue to seek inbound opportunities.

The presence of sophisticated financial sponsors has increased competition for quality assets but has also enhanced deal structuring, co-investment opportunities and exit options. Cross-border transactions are no longer one-directional; Asia is both a source and destination of capital.

While cultural differences can present challenges, Asia’s business environment is increasingly globalised. Cross-border collaboration, international management teams and bilingual professionals are now common. Investors who approach transactions with cultural sensitivity and local expertise often find that long-term relationships and trust-based business practices provide a significant advantage.