Most of us, at one point or another, have ranted about the minuscule scale of Pakistan’s corporate sector that boasts very few players who can truly be a part of the big boys club even regionally, let alone globally. While that can be attributed to countless factors, one of them is the lacklustre mergers and acquisitions (M&A) activity in the country as most big businesses shy away from consolidation and often prefers to keep control within the family.
This is in stark contrast to the global scene where M&A hit record levels in 2021, with a total exit value almost at $5 trillion across more than 38,000 deals, according to Pitchbook. Unsurprisingly, information technology was one of the key drivers of this activity, as evidenced by transactions like Microsoft’s $69bn acquisition of Activision Blizzard, accounting for almost $900bn in deal value.
Of course, none of this is news to anyone. Big (and relatively less big) tech companies are known to eat up smaller rivals to not only tackle competition but also to grow inorganically. Facebook’s acquisition of Instagram a decade ago is one of the most commonly known examples in this regard. On the other hand, such deals provide an exit avenue for startup founders to make a handsome return for themselves and their investors and play in the major league by joining the industry leader. Unlike the initial public offerings (IPO), there is potentially less market risk if the transaction is primarily in cash.
Consolidation and...
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